Alcoholic Drinks in Egypt

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Sample Alcoholic Drinks Market Research Report

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Overview

Discover the latest market trends and uncover sources of future market growth for the Alcoholic Drinks industry in Egypt with research from Euromonitor's team of in-country analysts.

Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections.

If you're in the Alcoholic Drinks industry in Egypt, our research will save you time and money while empowering you to make informed, profitable decisions.

When you purchase this report, you also get the data and the content from these category reports in Egypt for free:

• Beer
• Cider and perry
• RTDs and high-strength premixes
• Spirits
• Wine

The Alcoholic Drinks in Egypt market research report includes:

• Analysis of key supply-side and demand trends
• Detailed segmentation of international and local products
• Historic volumes and values, company and brand market shares
• Five year forecasts of market trends and market growth
• Production, imports by origin, exports by destination
• Robust and transparent market research methodology, conducted in-country

Our market research reports answer questions such as:

• What is the market size of Alcoholic Drinks in Egypt?
• What are the major brands in Egypt?
• Have there been any alcoholic drinks legislative changes over the past 12 months?
• How is the alcoholic drinks industry affected by the recession?
• What is consumed more; beer, wine or spirits?
• What have been the key trends seen in new product developments?
• Do alcoholic drinks consumers want value for money or added value?

Why buy this report?

• Gain competitive intelligence about market leaders
• Track key industry trends, opportunities and threats
• Inform your marketing, brand, strategy and market development, sales and supply functions

This industry report originates from Passport, our Alcoholic Drinks market research database.

Sample Analysis

Economic turmoil slows alcoholic drinks growth

The alcoholic drinks market continued to grow in 2011 despite political and economic turmoil as a result of the 25th of January 2011 Revolution. Decreased growth rates are directly related to recession in the tourism and hospitality categories which are the key drivers of the alcoholic drinks market in Egypt. Inflation rates had relatively little effect on alcoholic drinks prices which only marginally increased. Recorded growth can be attributed to the fact that most alcoholic drinks consumers are in the upper and upper-middle income classes and were only marginally affected by diminishing consumer expenditure.

Black market continues to hinder spirits’ sales

The black market for alcoholic drinks remains strong due to excessive taxation on imports. This is most evident and influential within the spirits category. Local producers and manufacturers continued to supply most middle-to-low income earners with spirits and have attempted to introduce higher quality products to attract higher income earners. However, these demographics continued to prefer imported brands that are only available through either the black market or Egypt Free Shops Company (EFSCO). Black market suppliers have become aware of the growing demand for illegal spirits and continue to expand the diversity and service of these products, with some even delivering to homes or so-called “outing” ie delivering to on-trade venues, the location of which is provided by phone.

Al Ahram Beverages continues to dominate the market

Al Ahram Beverages Co (ABC) will continue to be the most dominant player in the alcoholic drinks category in the years to come. ABC’s products are competitively priced, diverse and well positioned. They are made available through Drinkies, its off-trade distribution subsidiary, with 64 outlets spanning at least 12 governorates in Egypt. Lack of real competition as well as ABC’s extensive spending on advertising helped create a renowned and trusted brand name. Its in-venue marketing approach at most on-trade channels, targeting of newspapers and magazines printed off-shore, in addition to events sponsorship helped the company work around government restrictions banning alcohol advertisement. ABC also started focusing on online advertising benefiting from lack of restrictions around this media channel. This channel is a cheaper way to advertise, which is something of an asset in light of local economic difficulties and political uprisings in neighbouring countries which are major export trade partners of ABC.

The on-trade remains the most popular channel despite challenges

Egyptians prefer consuming alcohol in restaurants, bars or night spots. In 2011 a drop was recorded in both on-trade volume and value sales. This was primarily due to the huge drop in this channel’s sales as a result of the 25th of January Revolution and the toll it took on the tourism and hospitality industries. Another factor was the curfew that was imposed during the revolution and which continued until June 2011. Outlets eventually re-opened but only for very limited trading hours. Finally, security fears affected consumers’ decisions to spend time outdoors, especially until early in the morning.

Forecast performance is expected to improve despite scepticism

The alcoholic beverages market is expected to continue growing over the forecast period with expectations of gradual economic recovery. Parliamentary and presidential elections will be concluded by mid 2012 which should foster political and economic stability and re-instil street security. All of these aspects are expected to encourage the return of tourists to the country and the general revival of the travel and tourism industry. The future of the alcoholic drinks industry, however is much less clear given the rise of Islamist parties and other groups. Moderate Islamic parties (Muslim Brotherhood) have publically announced their support of the tourism industry but have as yet to comment on the alcoholic drinks industry, among others. However, experts believe that despite these claims, there is considerable speculation around potential bans on new production licences. Some experts believe that there will be the imposition of higher taxes and stricter distribution and sales policies, or perhaps even a ban on access to alcohol to Muslim nationals - already seen in more conservative countries within the region. Extreme scenarios could even result in a complete industry shut-down.

KEY TRENDS AND DEVELOPMENTS

Political instability leads to uncertainty around the market’s future

Egypt has been ruled by President Hosny Mubarak since 1981, one of the longest ruling presidents in the world. Egypt has always remained a relatively open and liberal country in the region under all its presidents, especially after the Anwar Sadat years and following the peace treaty with Israel concluded during his time. However, due to Hosny Mubarak’s long reign and neglect of Egypt, Egyptians have become increasingly frustrated with the state of the country and have begun looking for other options. The 25th of January 2011 Revolution is proof of the above and was a nationwide manifestation of political, economic and social frustrations felt by the majority of Egyptians. This continued post-revolution with the country gripped by uncertainty and power struggles as well as a deteriorating economy. If these events and circumstances continue over a long period of time, the country could ultimately be led to the brink of collapse.

Current Impact

The current political, economic and social instability will continue to take a toll on the tourism and hospitality industries which are key drivers of the alcoholic drinks category, as evidenced in the respective market volume and value growth rates of 6% and 10% in 2011, compared to 9% and 13% in 2010. The economic downturn also affected consumer spending, which in turn will impact on-trade channel volume and value sales growth at 5% and 9% respectively in 2011 compared to 10% and 14% in 2010. Off-trade channels might gain momentum in light of these circumstances but not for long with consumers favouring on-trade consumption.

The recession and particularly the decline in the alcoholic drinks market is also bound to affect market players’ advertising expenditure, as well as investments in new product developments or the opening of new distilleries. Such circumstances will definitely affect foreign investors’ decisions to access the Egyptian market at least in the short term.

Outlook

The political instability and turmoil currently characterising the country makes any future scenario impossible to predict. However, observers believe that the majority of Egyptians favour being more moderate and liberal over conservatism. Nonetheless, the state of anarchy and chaos that followed the Revolution, coupled by rising threats of violence and the fall of the Ministry of the Interior and subsequent deteriorating sense of safety and security, led to the rise of both extreme and moderate Islamic groups that have long been marginalised or suppressed by the fallen regime. The nascent openness now seen in the country in the form of newly established parties and new civil organisations means that no one is really sure what the outcome of the upcoming Parliamentary and Presidential elections will be.

It is expected that at least 20% of Parliament seats will be won by the long-banned Muslim Brotherhood in the upcoming elections through the newly established Freedom and Justice Party. This will be of great concern to many industries such as tourism, hospitality and alcoholic drinks in terms of the formulation of the new constitution and other economic and trade policies, with some such industries in fear of being banned or at the very least facing stricter regulations and policies on taxation, sales, advertising and distribution.

Future Impact

In the long term it is uncertain whether Egypt will follow the path of a country such as Turkey or be more like Iran and whether economic and social conditions will improve or worsen. Observers tend to believe in the moderate and liberal silent majority which will very soon vote in the country’s first real and free Parliamentary and Presidential elections. Moderate Islamic groups and parties, such as the Muslim Brotherhood, voiced their support of the tourism and hospitality industries but have not commented on more controversial industries such as alcoholic drinks. However, the toll of the economic downturn is likely to force the winning party into becoming more tolerant of such economic activities in order to help the economy and the country recover, boost employment and living standards and encourage FDI, which is currently at an all time low. Now that the country is moving towards free and open elections, no party or ideology will want to risk losing popular support and will concentrate on economic development and on improving living standards as a primary popular objective.

Accordingly, CAGRs of 9% and 6% in volume and constant value terms respectively are anticipated over the 2012- 2016 forecast period. During this period, most new product developments will take place in non-alcoholic beer, as well as wine in the form of limited releases. Given the economic and political circumstances in the country, the black market is expected to continue to thrive and will remain strong and supply higher-income earners with the alcohol they desire.

Extreme taxation

Import taxes on alcoholic beverages remain at a global high in Egypt. Beer is taxed at 300%, wine at 1,800%, and spirits, champagne and sparkling wine at 3,000%. This taxation system makes it impossible for any importer to sell these beverages at reasonable prices, curbing alcohol consumption in Egypt.

Current Impact

Al Ahram Beverages Company (ABC) and EgyBev both produce alcohol locally, although of a lower quality than products imported from abroad. Therefore, lower-income earners tend to buy these companies’ products, although not enough demand is created as the majority of these people have low disposable income and prices range between E£55 and E£75 for 1 litre of locally produced whiskey brands, E£45 and E£55 for 75cl of locally produced gin, or E£50 and E£75 for 1 litre of locally produced vodka.

High-income earners opt to buy their alcoholic beverage products from duty free or from black market suppliers, with the latter being particularly abundant in Egypt as they are aware of this extreme price discrepancy. Black market suppliers tend to buy their alcohol from duty-free stores and sell it directly to consumers in their homes. Apart from being more convenient it is also a much cheaper way of trading as it would normally sell for E£350 and E£400 for 1 litre of imported premium whiskey brands (Johnny Walker’s Black Label) compared to E£2,000-E£2,500 via the on-trade.

Outlook

Import taxation policies on alcoholic beverages are not expected to change in the near future and if anything they are likely to rise. In turn, this will do nothing to curb the black market which will continue to supply an extremely large percentage of higher-income earners with their alcohol needs. Spirits are especially popular through the black market as Egypt is known to have produced health hazardous spirits (reports of death and blindness) known locally such as “Black Table” and “Johnnie Talker”.

Both high- and middle-income earners are unwilling to purchase locally-produced alcohol, such as brands by ABC and EgyBev products, even if it is legitimate. This is because these products are considered to be of much lower quality and therefore not prestigious enough to serve to guests. As such they often opt to buy it off the black market.

Future Impact

In-light of the current political and economic turmoil, scepticism about the industry’s future in relation to concerns about Islamists ascending to power and the toll this would take on taxes, sales and distribution policies governing the alcoholic drinks industry, the black market is expected to increase its supply of alcohol to the Egyptian market in the future. This will continue to present a major obstacle for the legitimate market’s growth as well as entry by international companies. Black market suppliers are realising that alcoholic drinks is a growing market as alcohol becomes increasingly tolerated in Egypt and are starting to sell a wider range of products. Many different wines are expected to be available from these suppliers in the near future, over and above their existing substantial selection. Spirits remains the best-selling category in this market, followed by wine, especially premium and super-premium brands selling at E£250 and E£400 for 75cl compared to standard brands that sell between E£65and E£85 for 75cl.

Advertising increases throughout Egypt

Radio and television advertisements for alcoholic beverages are currently banned in Egypt. However advertising is legal in most magazines as they are printed off-shore or in free-zones, on billboards and in other media. The advertising of alcohol has increased in recent years as people became more tolerant and accustomed to alcoholic beverages in their country. Companies have also begun to look for and find advertising loopholes in order to push their products. Among these are sponsorship of major musical, entertainment and sometimes sporting events. In post-Revolution Egypt, online advertising, especially via social media websites, has become a trend. The alcoholic drinks industry has embraced this as it also guarantees specific targeting around individual products while also being relatively cheaper compared to traditional mass media and offline advertisement channels. In the current climate, this is consistent with most businesses cost-cutting plans.

Current Impact

Decreasing advertising costs or better targeting will be essential over and above a greater focus on developing an online presence in popular local websites. Furthermore, the popularity of globally renowned social media websites is at an all-time high in Egypt after the Revolution which was orchestrated on Facebook and digitally covered on YouTube. Companies have begun advertising their products through many different media and finding ways round laws in order to boost their sales. This has been quite successful as many products have now become much more renowned throughout the country. ABC and EgyBev now advertise brands such as Heineken, Sakkara and Luxor on large billboards located alongside roads linking Cairo to beach resorts. These roads are frequented by demographics of all income brackets, increasing exposure to a larger percentage of the population.

Not only have these billboard and magazine advertisements boosted awareness, but the two dominant players in the market have begun sponsoring many parties and events where radio DJs are obliged to mention the name of the sponsor when announcing the party on the radio. By merely announcing a company name on the radio, the name is not being directly advertised although it does create greater awareness of the company and its brands in the relevant regions. In many other cases, brand sponsorship is in the form of direct brand name references in advertisements of this nature.

Outlook

Companies are expected to decrease spending on traditional media channels, partly in cost-cutting attempts in light of the current economic turmoil in Egypt, as well as export markets in neighbouring countries with many facing similar political and economic turmoil as a result of the Arab Spring in countries including Tunisia, Syria, Libya, Jordon, Amman, Yemen, and even Morocco and KSA. Other directions include more new product developments in non-alcoholic beverages. This has been the most competitive category in recent years characterised by many competing brands and new market entries, even though it is still led by ABC.

ABC heavily advertised its products on the Cairo-Ain Al Sokhna road featuring multiple Heineken advertisements along the route. This road is mostly frequented by middle-to-higher-income earners year-round, and these advertisements are seen on a regular basis, greatly boosting brand awareness. The North Coast is another area that is often frequented during the summer months and it is during these months that companies tend to more vigorously advertise their new products. ABC even opened a Drinkie’s outlet at both the North Coast and in Ain Al Sokhna in order to ensure that, upon arrival, consumers are able to order the drinks they have seen on advertising billboards.

Sponsoring events has become increasingly popular for local companies wishing to advertise their products as they believe Egyptians are very sociable people and events are generally attended by a large number of people, especially those that are being sponsored. This has proven to be an effective way for companies to promote their products, as the only alcohol available at the event are brands being sponsored by the company.

Future Impact

Sales of alcoholic beverages are expected to continue to grow as a result of this increased reach in several media and advertising channels and the innovative marketing strategies that are being adopted by alcoholic drinks market players in the country. Should names such as Heineken, Sakkara and Stella become more popular, Egyptians are more likely to become more tolerant to them let alone be more aware of their existence.

Much of the Egyptian population is relocating from the city centre to the suburbs, meaning more of these roads are being built to transport people around the country. Therefore, companies are likely to put up more billboards on these roads, targeting all income segments that commute back and forth, further boosting sales in the future.

However, growth rates remain in doubt and will very much depend on a clear political and economic outcome. Nonetheless, it is possible that volume and constant value CAGRs could reach 9% and 6% over the 2012-2016 forecast period. A slight increase year-on-year is expected as political and economic stability is regained.

Limited new product launches

In a country where most consumers are Muslim, there are fewer new product launches in alcoholic drinks than there are in Western countries. Most of the launches that did take place in 2011 were concentrated within non- alcoholic beer, as this category appeals to a much larger consumer audience compared to other alcoholic beverages, consumption of which is still considered a sin. Some non-alcoholic beverages are often called “malt” beverages. This includes new product developments such as Bario, which was launched in 2010 backed by a large advertising budget, Gold launched by Faragallah and Schweppes Gold by Coca-Cola.

Current Impact

Outlook

Future Impact

Specialist retailers remain the only form of off-trade

Alcohol sales are banned in traditional and modern trade channels with very few exceptions, therefore specialist retailers in Egypt is the only off-trade channel that legally sells alcohol. These specialist shops are bound by law to only sell locally-produced alcohol. Egypt keeps import taxes on alcohol extremely high, ranging from 300% to 3,000%, in order to discourage consumption of alcohol in general, making it difficult for local retailers to import well-known brands. Supermarkets, grocery stores, hypermarkets and other such retailers cannot obtain a licence to sell alcohol and mostly do not want to sell these products for religious reasons.

Current Impact

Drinkie’s and Cheers remain the only two specialist retailers in the country. Between these two outlets, all locally-produced alcohol is available in the market. These chains belong to Al Ahram Beverages Co (ABC) and EgyBev, respectively.

Drinkie’s is currently the country’s largest specialist alcohol retail chain with 64 outlets nationwide. It is located in the most important areas of the country and can be accessed both by visiting the outlet and choosing what to buy or calling the call centre number and ordering home delivery by phone. All deliveries are made in black plastic bags or in cardboard boxes to avoid being flaunted in the streets.

EgyBev’s retail chain, Cheers, offers similar services, but opens later and is therefore not as well known. After Cheers began operating, Drinkie’s renovated its retail stores and upgraded its image to prepare for the competition.

Outlook

Home delivery is a very popular concept in Egypt. Fast food outlets, pharmacies, grocery stores, bookstores, and alcohol retailers all deliver to customers’ front doors. This explains the huge increase in Drinkie’s and Cheers’ sales once they had introduced home delivery services. Delivery service is expected to increase based on this ongoing desire for home delivery as well as convenience, which will make shopping at outlets less essential. Most customers are well acquainted with the range of products available as there is little to choose from and they already have preferences on wines, beers or spirits that they wish to order.

To date, Cheers has not been able to threaten Drinkie’s sales and will need to better establish itself in the market if it is to have an impact. With the adoption of new labels and more advertising, this might be possible in the long run.

During the forecast period, no new retail chains are expected to emerge. However, with the ongoing success of the current chains, ABC and EgyBev, these operators will increase the number of their outlets over the next few years to ensure they capture as much of the market as they can before competition intensifies further and new entrants make an appearance.

Future Impact

Pending the outcome of the upcoming Parliamentary and Presidential elections and the establishment of the new Constitution, laws are not expected to change in the near future. As such, Drinkie’s and Cheers are expected to remain the dominant retail outlets for alcohol purchases. With an increased liberal attitude in the country and hence increased alcohol consumption, ABC and EgyBev will open numerous outlets nationwide, thereby boosting consumers’ knowledge of alcohol and alcohol consumption.

Telephone delivery sales in particular are expected to increase as general alcohol consumption rises. Advertising has been on the rise and is expected to further boost sales for these two competitors. However, even with EgyBev’s increase in outlet numbers over the coming year, it will remain difficult for it to compete with Drinkie’s and will require considerably more advertising and focus to reach a similar stage.

Market merger and acquisition activity

Current Impact

There has been no merger and acquisition activity in the alcoholic drinks market to date. Al Ahram Beverages Co (ABC) has had to deal with increased competition due to the emergence of EgyBev in the market in 2005, creating a more vibrant market for alcoholic beverages in Egypt since then. Al Ahram Beverages continues to dominate, although the entrance of EgyBev is a strong indication that the market is still not saturated and holds potential for the future pending the outcome of the upcoming Parliamentary and Presidential elections and the establishment of the new Constitution.

Outlook

Even with the entrance of EgyBev into the market, the alcoholic drinks market remains small, making it unlikely to witness any merger and acquisition activity in the near future. Al Ahram Beverages continues to characterise the market, making it difficult for any company to compete. EgyBev managed to capture a small level of sales, but did not make a dent in ABC’s performance. ABC has been an attractive source of foreign investment in the country, with Heineken increasing its share in the company to ensure its position in the market and expand its reach to neighbouring countries, as ABC exports to Syria and Africa. However, in light of recent economic and political turmoil, such investments will be pending the outcome of the upcoming Parliamentary and Presidential elections and the establishment of the new Constitution, not to mention political unrest in these export markets.

Future Impact

ABC is unlikely to receive increased investment from other foreign companies as Heineken has already claimed a large share in the company. Together, Heineken and ABC are planning on increasing their reach into neighbouring countries as liberalisation increases in the MENA region, making it a booming market for ABC. EgyBev may then become an attractive company to other foreign investors who will see ABC/Heineken reaping the profits as the sole exporter in the region and which dominated alcoholic beverage sales in recent years. The outcome of the upcoming Parliamentary and Presidential elections and the establishment of the new Constitution will most certainly be the deciding factors in shaping these strategic developments.

MARKET BACKGROUND

Legal drinking age

The official legal drinking age in Egypt remains 18 for beer and 21 for wine and spirits. The government has begun clamping down on underage drinkers and venues that serve them, although few venues strictly enforce this law. Most bar and restaurant owners are well connected and therefore easily avoid trouble. Nonetheless, law enforcement officers have begun frequenting these venues much more often and are increasingly revoking licences as the government is attempting to tighten these laws.

Upper-class Egyptians tend to begin drinking at a much earlier age than the majority of the Egyptian population, who fall below the poverty line. This is because many of the former tend to travel frequently, witnessing the more lax drinking climate in foreign countries, especially in the West. The majority of lower-income earners in Egypt tend to be more religious, even if only superficially, and therefore only drink sporadically if at all. On average, consumption of alcohol begins at the age of 16 in Egypt, with few exceptions.

Drink driving

Drink driving in Egypt has remained one of the most prominent issues, especially among higher-income earners. The government is unable to clamp down on drunk drivers as breathalysers and other testing media have not been introduced into the market. However, many police officers will take the driver to the nearest police station for questioning and the driver can be penalised if found to have blatantly driven under the influence.

Driving laws have begun to be strictly enforced in Egypt over the past few years, particularly the wearing of seat belts and no mobile phone use while driving.

Advertising

Advertising alcohol in Egypt is strictly prohibited on national television, however, in recent years, advertisements on billboards and banners and in English language newspapers have rapidly increased, making advertising on national television unnecessary. Alcohol has become increasingly tolerated in Egypt over recent years, making these advertisements less shocking to and actually better received by much of the population. Billboard advertisements for Heineken and Sakkara beer are especially popular on roads such as the Alex-Desert highway leading to the North Coast beach resorts as well as the road to Ain Al Sokhna. Both these roads are frequented by middle-to-higher-income earners, who tend to be the main consumers of these products.

A number of off-shore printed magazines and newspapers that are distributed in Egypt are currently available in the market in addition to others that are printed in free-zone areas of Egypt thus not falling under the alcohol advertising ban. These magazines mostly target upper-to-middle income levels and consumers and are considered the perfect media for advertisers.

Beer and wine are advertised more frequently than spirits as beer is much more tolerated and has been present for a longer period of time. However, wine is becoming increasingly popular with a large surge in sales over recent years. Spirits are seen as being more controversial since they tend to be much stronger and therefore more potent. Wine and beer advertisements can be found in centrefolds and on the back pages of magazines, whereas spirits advertisements are reserved for the inside pages.

Radio advertisements are also banned in Egypt. However Nile FM (the sole English language station) announces all major parties around the country and is obliged to mention the names of the parties’ sponsors (which is Al Ahram Beverages in most cases), making this an indirect form of advertising.

NAMBs are treated as soft drinks in Egypt and are not subject to any legal restrictions.

Post-Revolution Egypt is witnessing a growing trend of online marketing in popular local, regional websites as well as international social media websites. ABC launched a new interactive website in addition to several fan pages on Facebook and a YouTube channel in response to the new-found interest in social media channels. This is also beneficial for companies as the cost of such advertisements is much lower compared to other traditional forms. It also guarantees better targeting and tracking of returns while also providing more specific targeting, given that internet users mostly fall within the upper-to-middle income demographics which are the primary target audience for alcoholic drinks.

Smoking ban

The smoking ban in Egypt remains extremely lax and only a very few restaurants enforce a no-smoking policy. Many of these choose not to adhere to these rules when well-connected customers wishing to smoke frequent the establishment. Egypt currently has one of the highest rates of tobacco consumption in the region due to cigarette and sheesha (water pipe) consumption.

Opening hours

Generally, legal working hours are 11.00hrs to between 24.00hrs and 05.00hrs, however these vary greatly, depending on the venue. This of course was not valid in post-Revolution months as a curfew was imposed between from 08:00 hrs and after 18:00 which was then extended to 20:00 hrs and finally until 24:00 hrs until it was lifted in June 2011. However, due to lack of street security and social and political unrest the majority of venues have cut their opening hours to close no later than 03:00hrs.

It is important to note that during the holy month of Ramadan, most of these venues stop serving alcohol to Egyptians. Most venues (bars, restaurants and nightclubs) require a passport in order to serve alcohol.

Alcohol retailing outlets stop serving alcohol from 12.00hrs to 14.00hrs during prayer time on Friday (the Islamic holy day) and then reopen their doors to the public. Restaurants and bars, among others, remain open during these hours and are not subject to this law.

TAXATION AND DUTY LEVIES

Egypt’s duty levels on alcohol imports are among the highest in the world. The import tax is 300% on beer, 1,800% on still wine and 3,000% on sparkling wine and spirits. For all alcoholic beverages, imported or local, an additional 100% sales tax (minimum E£200 per hectolitre of beer and E£7.50 per litre of wine or spirits) is payable.

To meet demand, establishments that hold a tourism licence are only required to pay a 450% tax for a set quota of imported alcohol such as wine and spirits. Although this makes the end price somewhat more affordable to upper-income demographics, it remains far too high for most ordinary Egyptians. Many consumers therefore continue to resort to duty-free shops or the black market for more affordable imported spirits as they are allowed to bring their own bottles and pay for “cover” which is usually between E£150 and E£ 250 depending on the type and quality.

On-trade premises are allowed to purchase a certain amount of alcohol from duty-free shops. Any additional bottles beyond this quota will include import tax. To evade this prohibitive tax, owners tend to order additional bottles from the grey market once they finish their quota.

In order to make up for high taxes, many unlicensed local producers choose to lower production costs and product quality. Egypt’s spirits industry, in particular, features many small companies selling very low-quality produce to low-income consumers without regard for their hygiene or health to evade the high taxes.

Given the small size of the market and the high taxes placed on alcohol, it is little surprise that, while there are some six state licences available for alcoholic drinks manufacturers, only two have actually been taken up.

OPERATING ENVIRONMENT

Contraband/Parallel trade

Importing spirits is almost impossible in the Egyptian market as import taxes currently stand at 3,000%. Therefore, consumers are unwilling and in most cases unable to pay such high prices for alcohol. Hence, this encourages illegal manufacturers, which locally produce low-quality spirits with names such as Johnnie Talker and Smirnoff as opposed to Johnnie Walker Scotch whisky and Smirnov vodka. These brands have been known to cause blindness and in some cases are even fatal, making them extremely dangerous when consumed on a regular basis. Therefore, contraband will remain a serious issue until import taxes decline on these items, making them affordable for a larger number of people.

Al Ahram Beverages (ABC) has started manufacturing spirits that are of higher quality than the previously mentioned contraband items, making them affordable to a larger percentage of the population. However, the lower-income percentiles of the market are still unable to afford these products, encouraging them to keep buying contraband products, which can be hazardous to their health. Upper-income demographics, on the other hand, tend to opt for renowned imported brands which they buy either via on-trade or the duty free shop or illegally through the black market.

It is important to note that the volume of alcohol bought in duty free and consumed by wealthier consumers is greater than any other type of alcohol bought by this income segment. Most high-income earners purchase bottles at the duty-free shops in the country they are leaving from, and then again once they land in Cairo, where they are entitled to four bottles per person. This is their preferred option as they are able to purchase foreign names at a competitive price. Another popular option is buying alcohol from black market suppliers. These suppliers generally hold a wide range of brands in all types of alcohol, especially wine. Therefore, when these higher-income earners run out of their duty-free purchases, they are able to buy from these black market suppliers at relatively competitive prices. Only in rare cases when the latter option is unavailable will higher-income demographics purchase alcohol from ABC, making its target market middle-income earners.

Duty free

The only legal off-trade outlets where Egyptians can buy imported alcohol are duty-free shops. All on-trade licensed outlets purchase their alcohol from Egypt Free Shops (EFSCO), which are situated across Cairo and other main cities throughout Egypt.

Periodical quotas for duty-free purchases are available for certain people in Egypt. These include journalists, diplomats and certain other foreign professions.

Egyptian and foreign travellers on international arrivals and departures are entitled to a 4-litre quota on arrival date, which decreases to 3 litres after 24 hours after arrival and no allowance after 48 hours from arrival date for a maximum of twice per year for Egyptians and four times per year for foreigners with a total purchases ceiling of USD250 per time. This also includes any other duty free shop purchases of tobacco, chocolate, perfumes, and cosmetics, among others. In this case, a carton of beer can be substituted for one litre of alcohol.

Egyptian duty-free shops use commercial agents as intermediaries between themselves and the producers when being supplied with alcohol as they are banned from importing alcohol directly. Only Egyptian nationals are entitled by law to act as agents and suppliers of alcohol. All import licences and agreements can be terminated relatively easily and are generally limited according to product, time or geographic area, although exclusivity is not required in all cases.

Cross-border/Private imports

• There is little to no cross-border private alcohol imports in Egypt due to the limited size of the market.

MARKET INDICATORS

MARKET DATA

DEFINITIONS

Explanations of words and/or terminology used in this report are as follows:

• GBO refers to Global Brand Owner, which is the ultimate owner of a brand.

• NBO refers to National Brand Owner, which is the company licensed to distribute a brand on behalf of a GBO. The NBO may be a subsidiary of a GBO or it may be a completely separate company. Share tables at both GBO and at NBO level are provided in the report. Reference to shares in the report analysis is at NBO level.

This report analyses the market for Alcoholic Drinks in Egypt. For the purposes of the study, the market has been defined as follows:

• Beer

• Wine

• Spirits

• Cider/Perry

• RTDs/High-strength premixes

Published data comparisons

National consumer expenditure

• Published data found were only limited to 2009, with 2010 reports and figures for the alcoholic drinks market not published at the time of writing. The only available statistics were for imports and exports in 2010 and Q1 2011. Reports relating to production were classified.

• Furthermore the alcoholic drinks market as outlined in this report in terms of categories is not consistent with the way it is accounted for in Egypt as the latter does not include NAMBs.

Sources used during the research included the following:

The Central Agency for Population Mobilization and Statistics (CAPMAS)

The Cabinet of ministers Information Centre

US Commercial Services - March 2010

The American Chamber of Commerce in Egypt

STRATEGIC DIRECTION

• Al Ahram Beverages Co (ABC) is Egypt’s leading alcoholic beverages company and should continue to lead this category in the years to come. The company’s future plans include expanding production, the introduction of new brands in spirits and wine, as well as potential new strategic partnerships in these categories with global partners. However, in light of recent events, most of these expansion, product development and partnership plans were put on hold pending a clearer political and economic scenario as well as the outcomes of the upcoming parliamentary and presidential elections.

KEY FACTS

COMPANY BACKGROUND

• ABC was founded in 1897 and privatised in 1997. It has since evolved from an Egyptian public sector company into a “world-class beverages company”. ABC is currently on the road to globalisation.

• ABC bought out its only competitor, El Gouna Beverages, in 2001 and acquired a short-lived monopoly until the emergence of the Egyptian International Beverage Company.

• In 2002, Heineken International acquired ABC for a total enterprise value of US$360 million. The deal raised Egypt’s profile for foreign direct investment during a somewhat sensitive time in the region. Heineken is currently ABC’s parent company and has been increasingly aligning itself with ABC’s image.

• In 2003, Al Ahram Beverages Co (ABC) began to locally produce the Heineken beer brand which had previously been imported.

• ABC has recently given more attention to its online image through a revamped interactive website. However, this remains a marketing and awareness tool, together with other related initiatives including Facebook fan pages for its brands and a YouTube Channel. E-commerce will not feature heavily in future sales strategies, however it is emerging as an effective and cost efficient marketing solution in light of the rising trend of internet and social media in post revolution Egypt. It will also serve as a cost cutting approach in the near future pending a clearer political and economic scenario after the conclusion of the parliamentary and presidential elections by mid 2012.

• The company’s business development plans were geared towards export operations to neighbouring countries in the MENA as well as Africa. Most of these trade partners are currently suffering similar political, economic and social turmoil as a result of a wave of revolutions and turmoil that hit the region with outcomes of the so called “Arab Spring” movements and their effects on policies and regulations around alcoholic drinks remaining unclear.

PRODUCTION

• ABC produces beer, non-alcoholic beer (known as “malt”) beverages, wine, spirits and RTDs and has held a dominant position in all of these categories compared to local and foreign competition. ABC also exports increasing volumes of the Fayrouz and Birell brands to foreign markets, namely Saudi Arabia.

• Since 1997, ABC has more than quadrupled its production capacity. It has focused on upgrading its facilities and machinery in order to compete with foreign brands in an effort to meet the demands of its clients.

• ABC currently has five production facilities in Egypt: Gianaclis winery and distillery, El Obour brewery, Badr, Sharkia, and a malting plant.

• ABC’s premium brands consist of Sakkara Gold and Heineken, all of its wine brands, ID Vodka beverages and Auld Stag whiskies.

• The economy brands are Fayrouz, Birell and Stella as well as Zottos, Zibib and Bolanachi Zibib spirits.

• The company’s brands are currently being streamlined as part of ABC’s assimilation into Heineken. However, in the meantime, ABC continues to produce a wide range of cheap, lower-quality spirits to meet the demands of the vast majority of lower-income consumers who comprise the largest consumer base for local spirits.

COMPETITIVE POSITIONING

• ABC enjoyed a monopoly in the alcoholic drinks market for many years. It remains Egypt’s uncontested dominant producer and distributor of alcoholic drinks. The company aims to saturate the market by offering products in the economy, standard and premium quality segments and price brands to a wide range of consumers.

• Heineken acquired ABC in 2002, representing one of the largest and most important takeover deals in Egypt’s commercial history. The development of non-alcoholic beers enabled the company to expand its market beyond Egypt and extend its reach to other countries in the MENA region and, increasingly, in Africa.

• ABC’s dominant market share continued to decline during the review period due to the emergence of EgyBev and the launch of its new products. EgyBev’s wine and beer brands have captured considerable market share, proving to be a competitor to ABC. However, ABC still dominates the market through its well-known Heineken brand and premium wines.

• ABC’s small share in spirits is a result of the small consumer base and lack of sales that currently exist for these products in Egypt. The black market dominates spirits sales in the country and the lower-income population who purchase cheaper spirits brands does not engender enough demand for spirits to achieve substantial sales.

• ABC remains dominant in beer, wine and RTDs due to the high import taxes placed on these products. These taxes are not expected to decline in the near future and therefore ABC will continue to hold the upper hand in these products.

• ABC launched two new products over the review period, Ayam white and red at E£80 and E£85, respectively, and Zaman red sold at E£60.

STRATEGIC DIRECTION

• EgyBev launched its own specialist retailer Cheers in early 2007 in order to compete with Drinkie’s by ABC. However, Cheers currently remains second in the market to Drinkie’s and while it is endeavouring to capture market share, it is having difficulties doing so. Cheers is planning to increase its outlets to 20 stores, focusing mainly on Cairo and Alexandria. However, it is making considerable effort to update its call centre service as this has proven to be very successful in boosting Drinkie’s sales.

KEY FACTS

INTERNET STRATEGY

• Cheers’s internet strategy is limited to EgyBev’s usage of this media primarily for marketing. The company has no plans to use the internet for e-commerce in terms of ordering and selling its products online.

COMPANY BACKGROUND

• Cheers was founded in early 2007 and is the specialist retailer arm of the Egyptian International Beverage Company. It was launched in an attempt to compete with and break Drinkie’s monopoly.

• Cheers has had the luxury of being able to mimic all of Drinkie’s services, adopting tried-and-tested strategies that have proven successful. Cheers currently has its own call centre.

• Cheers’ home delivery also involves promotions and deals, although it tends to more heavily advertise and promote EgyBev’s products than those of ABC’s.

• Unlike Drinkie’s, Cheers sells its parent company’s products as well as those of ABC. Cheers actively engages in promotions, such as offering customers one free bottle of Amstel Zero with every order.

COMPETITIVE POSITIONING

• Cheers was the second and latest addition to the specialist retailer channel in the alcoholic drinks market in Egypt. It has proven to be successful although it needs to boost its sales and outlet numbers in order to take a greater percentage of the market from Drinkie’s. With an increase in EgyBev’s production capabilities and new products, Cheers may be able to capture more market share. However, despite its efforts, Drinkie’s is still expected to remain the dominant player in the specialist retail channel of the alcoholic drinks market.

STRATEGIC DIRECTION

• Drinkie’s continues to develop, diversify and improve its services. The company started with a small number of outlets which had increased to 42 by 2011. ABC launched its retail outlet Drinkie’s in 1999, making it the first retailer to introduce a free home delivery service. Drinkie’s delivery service was extremely well received by customers and the discreet packaging in which it delivers its products is greatly appreciated, given the religious view on alcohol consumption. In 2006, the company launched a call centre to handle its increasing business. This helped it improve its customer service and decrease its overall costs, becoming the most efficient outlet in the market. Drinkie’s is renowned for targeting specific consumer groups with promotions. Upon receiving merchandise, it sends small sample bottles of other types of alcohol not ordered, or flyers with promotions being carried out at that time. All forms of marketing have proven to be successful for the company. Although Drinkie’s only sells the products of its parent company ABC, this has not proven to be a major disadvantage.

KEY FACTS

INTERNET STRATEGY

• Drinkie’s has not considered the internet as a selling platform or for e-commerce operations. As well as its mother company ABC, Drinkie’s utilises this media solely for advertising and marketing.

COMPANY BACKGROUND

• Drinkie’s was established in mid-1999 and is the retail arm of Al Ahram Beverages. The company was very well received when it opened to the public and has remained popular.

• Drinkie’s enjoys a near monopoly in the retail outlet channel of alcoholic beverages in Egypt, however, recently, Cheers liquor stores have been expanding, opening more outlets nationwide.

• Drinkie’s sales were estimated at E£50 million in 2011 with 64 outlets spanning at least 12 governorates and all major cities of Egypt. Nonetheless, it has a higher concentration of outlets in Cairo, Giza and Alexandria in addition to all resort destinations of the Red Sea, South Sinai, Upper Egypt and the North Coast.

PRIVATE LABEL

• ABC has focused its efforts on developing its own private label. The company’s advertising and marketing efforts are mainly concentrated on its private label, especially those that have existed for many years and which now benefit from consumer loyalty.

• ABC’s private label portfolio could be considered wide in terms of the different categories (beer, wine, spirits) and labels within category. However, in terms of the positioning of its private label, the range is much more limited to budget and mid-priced market ranges.

• ABC’s private label continued to increase its share year-on-year over the review period primarily thanks to the relatively better value for money it offers compared to competition as well as parallel advertising efforts pushing its private label onwards.

COMPETITIVE POSITIONING

• Currently, Cheers is only considered a minor competitor in the specialist retailer channel in the alcoholic drinks market. However, Drinkie’s has been actively renovating its outlets and increasing its promotions and deals in order to ensure it is ready to deal with any competition Cheers is likely to provide.

STRATEGIC DIRECTION

• EgyBev is a prominent player in Egypt’s alcoholic drinks market, however recent events in the country and the heavy toll they had on hospitality and tourism had a considerable impact on the market as whole. This was particularly true for EgyBev which is more dominant in on-trade than off-trade with the horeca channel being a key deriver of its volume and value sales. EgyBev is expected to work on pushing its off-trade sales especially in the near future to deal with the continued collapse of tourism and hospitality likely to be sustained into 2013 and even 2014. Any strategic concrete plans around EgyBev’s future development will depend on the outcomes of the parliamentary and presidential elections in 2012 and fears that some religious parties could enforce bans, or at least impose higher taxes, on alcohol.

KEY FACTS

COMPANY BACKGROUND

• Founded in 2003, EgyBev emerged through a group of local investors, distributors and managers of the former company El Gouna Beverages. The company entered the market with its elite wine brand, Shahrazade, offering red, white and rosé varieties. Its second product launch was major beer brand, Luxor.

• By 2006 EgyBev had hired approximately 150 employees, a number it has retained ever since. Sherif Fanous, an Egyptian business tycoon, owns 75% of the company, while 10% is owned by Wadi Foods and the remaining 15% by wholesalers who continue to distribute 70% of EgyBev’s products.

• EgyBev mainly sells its products to on-trade outlets, such as hotels and restaurants, and licensed retail stores. The company introduced its retail chain, Cheers onto the market in 2007, and plans to spread this fascia nationwide by the end of the forecast period.

PRODUCTION

• The company increased its production capacity substantially since 2005, however it remains small in comparison to ABC. EgyBev produces close to 130,000hl of its Luxor Classic, Luxor XXX and Luxor Weizen beer and over 10,000hl of its Shahrazade, Jardin du Nil and Moon Roof wines at its El Gouna location.

• Rumours have indicated that a new distillery is being prepared in order to begin production of RTDs and spirits to try to create greater competition for ABC. EgyBev is also focusing more on the quality of its wine production due to competition in the market and the increasing maturity of the wine culture in the country.

COMPETITIVE POSITIONING

• EgyBev remains a much smaller player than its major competitor ABC. However, it managed to increase its share from 1% of the market in 2005 to 7% in 2007, representing a substantial increase. It has since edged up further to 8% in 2010, a position it retained in 2011.

• The company’s share in beer grew from 1% in 2005 to 7% in 2011 due to the growing popularity of its Luxor brand and XXX and Weisen extensions. The company also increased its share of wine sales thanks to its introduction of Shahrazade wine, considered a superior-quality product in the Egyptian market and which ranked third in 2011.

• EgyBev is predicted to continue growing substantially over the forecast period due to its active increase in production and focus on new product launches.

• EgyBev’s main weakness is the absence of a multinational backer, such as Heineken for ABC. However, there is speculation in the market that EgyBev is a potential target for such merger or acquisition activity itself, which could be equally likely to occur over the forecast period.

• Tourism was initially the target market of EgyBev as well as customers who purchase drinks in the on-trade. Due to its relatively focused market, it has managed to capture a substantial portion of these target audiences and hence will be a key area for development. The company will endeavour to push volume and value sales, particularly via the on-trade, despite a crippled tourism industry and diminishing disposable incomes as the recession will continue into the forecast period.

HEADLINES

• Beer remains the largest category in alcoholic drinks with sales of E£4.3 billion and 195 million litres in 2011

• Domestic lager leads in volume terms with 103 million litres in 2011 followed by low/non-alcohol beer with 92 million litres in 2011

• Domestic lager is characterised by brands such as Stella and Fayrouz, while imported lager remains non-existent

• Dark beer continues to be non-existent in Egypt as the market is not yet developed enough for this type of product

• Al Ahram Beverages Co (ABC) sustains its lead in beer, holding a 44% volume share in 2011

• Beer is expected to witness CAGRs of 9% in volume and 3% in constant value terms in the forecast period

TRENDS

• The political and economic turmoil and popular uprising in January 2011 had a significant impact on the performance of alcoholic drinks in general. However, beer continued to be the least affected category as it is more dependent on off-trade sales than other categories, the sales of which are more reliant on the on-trade. Other factors include the relative tolerance in the country to this type of alcohol, which over time has come to be considered as less “sinful” and which has the added attraction of being relatively lower priced. However, fears around the country’s potential development towards a more conservative Islamist society, combined with uncertainty about the future, will encourage companies, such as ABC, to focus their advertising efforts on what are referred to locally as non-alcoholic “malt” drinks, including Birell and Fayrouz both of which are promoting new branding.

• Despite being a predominantly Muslim nation where alcoholic drinks are forbidden, beer is the most tolerated and also appreciated for its affordability. The majority of Egyptians live below the poverty line and are not well educated leading to lack of awareness and understanding of the large varieties of alcoholic beverages and a tendency to opt for the cheapest products available, which are generally domestic beers.

• Beer sales grew 6% in volume terms in 2011, down on the CAGR of 8% in the 2006-2011 review period. Value sales rose 8% but despite the increase, this growth was still lower than the 10% CAGR registered over the review period. These trends were unsurprising given the political and economic turmoil and continued uncertainty that had the most severe toll on on-trade channels, with the curfew restricting socialising activities and the unrest discouraging tourists from visiting the country. Nevertheless, the good growth seen in 2011 was generated mainly by sales from middle- to low-income demographics, which represent the majority of beer consumers.

• Domestic lager led sales in volume terms reaching 103 million litres in 2011 equating to 53% of total beer sales. Standard lager sales increased by 8% in value terms in 2011, while economy lager grew 8% and premium lager trailed behind with 6% growth. Domestic lager is becoming increasingly popular among many social classes as the quality of this type of beer is improving. Many higher-income earners enjoy drinking Stella, a brand they have grown up with and for which they have acquired a taste. As a consequence, volume sales of premium lager increased at a faster rate than economy or standard varieties. However, lager in general was affected by the political and social unrest which resulted in an on-trade channel decline in value and volume sales, with the curfew and general consequences of the unrest keeping people at home.

• Non-alcoholic beer followed, capturing sales of 92 million litres in 2011. Egypt remains a predominantly religious country, with many lower- and middle-income earners opting to avoid consumption of alcohol entirely as it is in contravention of their Islamic beliefs. Non-alcoholic beer recorded sales of E£1.1 billion, with the majority of value sales stemming from lager, as this is the most expensive beverage within this category in Egypt.

• The majority of off-trade volume beer sales were channelled via food/drink/tobacco specialists, which held a 47% share in 2011. This channel was so popular because alcoholic beverages, with very few exceptions, cannot be legally sold in supermarkets/hypermarkets, small grocery retailers, small grocers or forecourt retailers. These outlets do not have a licence to sell alcoholic beverages, although supermarkets/hypermarkets do sell substantial volumes of non-alcoholic beers, enabling this channel to achieve a 31% off-trade volume share of beer sales in 2011.

• The off-trade remained dominant for beer sales in 2011 as it is cheaper to buy beer from this channel, making it popular among the less wealthy social classes. However, until the unrest sales via restaurants/bars had been increasing dramatically, with overall value sales booming due to the large surcharges placed on alcoholic beverages.

• Both cans and glass bottles remained the most popular forms of packaging of alcoholic beverages in 2011. Consumers tend to show no particular preference for one or the other, and make their decisions to purchase on the basis of what is available and which is the cheapest. In 2011, 330ml bottles of Stella retailed at E£5 while 0.5 litre bottles and cans each retailed at E£7.50. Heineken retiled at E£7 for 330ml cans and E£9.5 for 0.50 litre bottles. These prices increased by around E£0.50 year-on-year during the review period, although the rises were not enough to dent the overall demand for these products.

• Light beers are not popular in the market nor are they readily available. The majority of the population tend to consume brands to which they have become accustomed, such as Stella, Sakkara or Heineken, which remain the most popular. If a light version of these beers were to be introduced, it is unlikely it would succeed, at least in the forecast period, as the market is still too nascent for this type of product.

• Dark beer remained non-existent in Egypt thanks to consumer indifference to this product and lack of awareness of the category. Alcoholic beverages, in general, are a growing but still relatively new concept, with dark beer seeing only minimal demand from high-income earners who have become acquainted with this product when travelling abroad. Dark beer is not expected to enter the market in the near future or perform well should it do so given the religious intolerance to alcoholic drinks in the country and the ongoing economic and political uncertainty.

PRODUCTION, IMPORTS AND EXPORTS

• Premium beer brands, such as Heineken and Stella Local, which dominated the market in Egypt have now been discontinued. Sakkara 7 Stars and Stella Premium were both discontinued due to lack of demand. However, there has been a simultaneous increase in non-alcoholic “malt” beverages as these products appeal to the majority of Egyptians who remain religious and prefer to avoid alcohol.

• ABC has been exporting substantial volumes of non-alcoholic “malt” beverages with these products accounting for 100% of its total exports over the past few years. Specifically, its Fayrouz brand has increased in popularity throughout Egypt as well as all of its export markets due to its large variety of flavour extensions as well as its sweet taste, making it attractive. However, export operations were greatly affected by the political and economic turmoil in 2011, unrest which spread throughout most neighbouring MENA and Arab countries, not to mention the lack of security at Egyptian ports as well as ongoing riots and strikes.

• The 300% import tax continued to hamper imported beer in 2011, making it impossible for these products to enter the market. The majority of the population live below the poverty line and are unwilling to pay the difference in price for a product they do not consider to be superior. Most higher-income earners tend to buy their desired imported beer brands, such as Corona at duty-free shops as these are not currently available in the market, further making the market for these imported products unsustainable.

COMPETITIVE LANDSCAPE

• Al Ahram Beverages Co (ABC) remained the outright leader in beer with a 44% volume share in 2011. Its brands include Birell, Fayrouz, Heineken, Meister Max, Sakkara Gold, Stella and Amstel Zero. All of these products are renowned helping them to maintain steady market share. Amstel Zero was introduced to the market in 2009 and has since gained a one percentage point increase in share, taking it to 2% in 2011.

• EgyBev’s share increased to 8% in 2011. Its progress stemmed from its sole Luxor brand of beer, the share of which increased over 2011.

• Carlsberg entered the market in 2008, capturing a volume share of 2% in 2011. It has since maintained its share, targeting higher-income earners due to its higher unit prices. The brand name is renowned worldwide, making it appealing to Egyptians who have travelled and tasted it abroad.

• Birell’s share increased slightly due to its new package design and an aggressive marketing campaign that helped it to defend its leading position. Fayrouz also launched a new product called Fayrouz Free in 2010, although data has yet to be recorded for this product and it was not widely present in stores. Schweppes also launched a new product called Schweppes Gold, a fruit-flavoured beverage, accompanied by an aggressive campaign and it captured an estimated 1% market share in 2011.

• No merger or acquisition activity currently characterises the beer market nor is any expected due to the large percentage share Heineken currently owns and the scepticism that exists about the industry’s future in the current economic and political context. A more liberal Egypt could emerge after the 2012 elections and encourage market entry of new players. However, should the more conservative religious groups become more powerful, both local and international investors will have to start putting their exit strategies in place.

PROSPECTS

• Beer sales are expected to increase in both volume and constant value terms, reaching 300 million litres and E£4.9 billion respectively by 2016. These increases favour the most likely outcome of a moderate Egypt from the elections and ensuing growing popularity of beer thanks to its lower ABV, cheaper prices and longer standing presence in the market.

• Lager is expected to remain the leader in constant value sales, reaching E£3.6 billion compared with E£1.1 billion for non-alcoholic beer. This indicates an ongoing trend towards the consumption of alcoholic beverages regardless of their higher unit prices, as well as a reinvigorated tourism industry post the 2012 elections.

• Advertising campaigns will remain popular for beer products, especially along the main highways en route to summer homes owned by wealthy Egyptians and ex-pats. Magazine advertisements as well as sales from indirect radio announcements of summer concerts and venues will continue to be relevant, sustaining the popularity of Heineken, Sakkara, Luxor and other beer brands.

• ABC is expected to remain the dominant market player as EgyBev will fail to bring in an international player to partner. The presence of Heineken in Egypt will appeal to many consumers and is expected to continue to do so in the near future. Furthermore, beer is highly dependent on the tourism and hospitality industries which will continue to be down until 2013 at the earliest as a result of the recent turmoil in Egypt.

• The ongoing growth of the alcoholic drinks market, coupled with increasing liberalisation in the region, is expected to attract more foreign investors. However, this may take some time due to Heineken’s stronghold on the market and the relatively small market size compared with the size of the population. Furthermore recent socio and political turmoil, coupled with potentially strengthening Islamic religious groups, is bound to affect these prospects and much will depend on the outcome of the 2012 elections.

• Dark and stout beer is not expected to enter the market in the near future as the alcoholic drinks market in Egypt is still relatively nascent. These products are only likely to be popular among a very small audience encompassing higher-income earners exposed to these products when travelling abroad.

SECTOR BACKGROUND

Lager price band methodology

The premium beer segment in Egypt consists of Heineken by ABC and Luxor XXX by EgyBev. Standard lager consists of Sakkara Gold and Meister Max with Stella (ABC) and Luxor (EgyBev) in the economy segment. Standard brands, including Sakkara King and Meister, were discontinued as they were unable to attract a large enough audience.

To date, Euromonitor International has considered Heineken a standard brand. However, the price of Heineken has increased in recent years in comparison with other local brands and targets the higher-income population, as opposed to Stella which targets middle-to-lower-income demographics. For this reason, Heineken is now considered a domestic premium brand in the Egyptian market. In 2009 a 24-pack of 330ml Stella (cans) retailed at E£108, compared to E£256 for a 24-pack of 330ml Heineken (cans). In 2011 the prices remained very close up by less than 4% with a 24-pack of 330ml Stella (cans) costing E£112 compared to E£162 for a 24-pack of 330ml Heineken (cans).

CATEGORY DATA

TRENDS

• In 2011, cider/perry sales remained non-existent in the Egyptian market with the category unlikely to enter the country in the near future. Much of this stems from the small percentage of the population that consumes alcohol, making it difficult for new products to make any headway. Knowledge of cider/perry in Egypt is also restricted to a very small consumer base of higher-income earners, many of whom have come across these products while travelling abroad, leading to extremely low demand for the category. As such cider/perry is highly unlikely to gather momentum in the near future.

HEADLINES

• RTDs/high-strength premixes grows to 732,000 litres and E£30.2 million in 2011

• High-strength premixes remains non-existent in Egypt, with RTDs being the only product available

• RTDs grow at a rate of 6% in volume and 7% in current value terms in 2011

• Al Ahram Beverages continues to dominate RTDs/high-strength premixes with a 99% volume share

• RTDs/high-strength premixes is expected to register CAGRs of 9% and 7% in volume and constant value terms respectively over the forecast period

TRENDS

• Sales of RTDs have increased at healthy rates over the years, jumping from 637,000 litres in 2009 to 732,000 litres in 2011. RTDs/high-strength premixes is solely dependent on sales of spirit-based RTDs, with malt- and wine-based RTDs as well as high-strength premixes not present in the market. Since 2006, value sales doubled, jumping from E£16.2 million to E£30.2 million in 2011, indicating a fast-growing market as well as a relatively popular drink which could confer opportunities on market players.

• Volume growth of 6% in 2011 was low in comparison with the review period CAGR of 9% as was value growth of 7%, which was much lower than the 13% CAGR between 2006 and 2011. Inflation was running high over recent years, causing companies to keep their prices down in order to retain their customer bases. As such, value sales growth was somewhat hampered.

• Spirit-based RTDs remained the only product within RTDs/high-strength premixes and therefore accounted for the total growth in this market area. These drinks remain extremely popular among Egyptians thanks to their sweet fruit-flavouring. Egyptians tend to like sweet-tasting drinks and can therefore overlook the spirit-based aspect of this category’s drinks as they do not taste strongly of alcohol.

• The RTDs category has considerable potential in the Egyptian market as it is not viewed negatively in the same way as spirits. This will assist it in attracting a much larger consumer that encompasses most income groups, including lower-to-middle-income earners. Many people consider RTDs more as soft drinks and do not focus on the spirit-based aspect of this category.

• RTDs are mainly sold through off-trade outlets as they are not popularly consumed with meals in a restaurant. These products tend to be consumed on trips to the beach or at home as they are sweet and therefore are better consumed on their own.

PRODUCTION, IMPORTS AND EXPORTS

• Import and export activity remains negligible in RTDs as this is relatively new product in Egypt. RTDs were only introduced to the market as late as 2003 with their sales therefore still requiring time to gain momentum compared with other alcoholic beverages, such as wine and beer. However, they have been extremely successful since their entrance due to their sweet flavour and low alcohol content.

• Imports are unlikely to enter the market in the near future as they are too expensive for the majority of the population. Furthermore, it would be difficult for imports to compete with domestic products, such as ID Edge and ID Double Edge, produced locally by ABC.

COMPETITIVE LANDSCAPE

• ABC has a monopoly in RTDs/high-strength premixes with a 99% volume share in 2011. Its most popular brand, ID Edge, held a 98% brand share, followed by ID Double Edge with 2%. ID Double Edge was the company’s most recent introduction and has a stronger flavour than ID Edge, making it less popular, although it has gained some marginal ground.

• Domestic manufacturers are the only producers present, accounting for all RTDs/high-strength premixes sales. They offer competitively-priced products which make it difficult for foreign manufacturers to enter the market and compete, especially given the exorbitant import taxes.

• There were no key new launches in 2011, although, with the growing popularity of RTDs, it would not be surprising if a new player were to enter the market in the near future.

• ID Double Edge was initially launched in many different flavours. However, these were pared down to one, with only water melon flavour, retailing at E£11 per 275ml, only available by 2011.

• ID Edge is advertised where possible by ABC and is aimed at younger consumers, using the slogan “identify yourself”. This product is marketed as a trendy, social and friendly drink.

• All ABC’s RTDs are sold in glass bottles with clear bottles used for the ID Edge bottles and black for ID Double Edge. The packaging is unlikely to change in the near future as the company needs to first establish a consumer base before considering a change to the packaging. Furthermore, such changes are unlikely given that the company has no competition in the market.

• There was no merger or acquisition activity in RTDs/high-strength premixes in 2011 as ABC continued to hold a monopoly in this product category.

PROSPECTS

• RTDs is expected to grow at a CAGR of 9% in volume terms to reach 1.1 million litres by 2016 and by a CAGR of 7% to reach E£43 million. Providing a more conservative government is voted into power in 2012, these growth rates are likely to remain healthy as RTDs will continue to be popular for their sweeter flavour.

• RTDs are expected to remain popular in the market as they are extremely sweet with potential to be launched in very many different flavours, making them popular among a large percentage of the population. Even though these products are spirit-based, they lack the negative connotations of spirits because they are sweet and their packaging less characteristic of alcoholic beverages.

• RTDs sales are expected to remain the most popular through off-trade outlets as they are mainly consumed on their own and not as an accompaniment to a meal. Most consumers prefer to drink RTDs on the beach, as they are a summer fruity drink, or at a party. RTDs are not expected to become more popular in restaurants as consumers find them too heavy to consume while dining.

• RTDs should remain averagely priced in order to continue to appeal to consumers. Furthermore, as they are also aimed towards young consumers, some pricing constraint will be necessary as many of these young consumers depend on allowances from their parents or are just starting out on their careers and their wages are low.

• Prices are expected to decline over the forecast period, even though ABC will remain the only player in RTDs/high-strength premixes and not subject to competition. Despite rumours of EgyBev’s entrance into RTDs/high-strength premixes, no sign of any new launches are expected in the near future.

CATEGORY DATA

HEADLINES

• Spirits declines 1% in 2011 to reach 3 million litres but increases 8% to E£3.2 million

• Whiskies remains the largest category with sales of 1.9 million litres and E£2.3 million in 2011

• Spirits is hampered by negative connotations associated with consumption of beverages with a high alcohol content

• Diageo continues to lead in spirits with a 41% volume share in 2011

• Spirits is expected to register CAGRs of 3% in volume and 6% in constant value terms over the forecast period

TRENDS

• Spirits witnessed drops in volume terms in Egypt primarily as a result of the sharp decline in tourism and hospitality industries due to the recent political uprising and economic turmoil. Spirits are extremely dependant on on-trade channels, which were the most affected channels during the early months after the uprising. This was mainly due to a curfew that was put in place and subsequent decline in horeca sales, mainly represented by hotels and other such travel accommodation and are which are therefore reliant on tourism.

• Spirits remains a relatively small category due to the high ABV of these drinks. Many of these products are also available through the black market, especially products referred to as “Johnny Talker” and “Black Table”, that if consumed are often highly injurious to the health. They have been known to cause blindness and sometimes even death. Although many Egyptians steer clear of these products, legitimate spirits are also inaccessible to them because they are extremely expensive thanks to high import taxation.

• The majority of the Egyptian population live below the poverty line and many such demographics are also quite religious. With alcohol considered sinful in Islam, many of these people would not even consider drinking any form of alcohol, therefore only a very small percentage of the population are consumers of spirits. However, more consumers are likely to become interested in spirits the more they are exposed to the drinking culture and alcohol becomes more readily available and widely accepted in some communities.

• Whiskies continued to dominate spirits with sales of 1.9 million litres and E£2.3 million in 2011. This category has been present in the country for many years and the few people who do consume it, have become accustomed to its taste. Most people like to drink whiskies straight, ie with no mixers or with ice. It has also become increasingly popular among higher-income female demographics who have begun drinking whiskies with a mixer at parties.

• Blended Scotch whisky remained the most popular type of whiskies, accounting for 1.7 million litres of total sales, with bourbon/other US whiskey accounting for 71,000 litres. Bourbon/other UK whiskey tends to have a niche status as it is more expensive, making it affordable to only a small percentage of the population.

• Sales of aniseed-flavoured spirits reached 447,300 litres in 2011, accounting for all “other spirits” sales. This is largely due to the fact that it is extremely cheap and Egyptians have a preference for the aniseed flavour. This product is mainly consumed by lower-income earners as it is poor-quality alcohol sold at cheap prices.

• Non-flavoured vodka remained the most popular type of vodka in 2011, with an 86% share of total vodka sales. However, flavoured vodka has been increasing in popularity as companies began venturing into this field. Except for the decline in 2011, players have been encouraged by the steady progress of the alcoholic drinks market in the country and some, such as ABC, have actively endeavoured to boost vodka sales.

• Super-premium whiskies and vodka sales dominated in 2011, with 53% and 79% of total volume sales, respectively. These products are mainly consumed by wealthier Egyptians and ex-pats, who are unwilling to take a chance and pay less money for black market alcohol, the provenance of which is unknown and which has been known to cause serious illnesses or death. Bucking the trend seen in other types of spirits, it was the economy variants of gin that captured the majority sales at 61%, as this category tends to be more popular among lower-income earners.

• Spirits are mainly consumed in the on-trade, in bars, restaurants and nightclubs which explains the drop in on-trade sales and overall volume and value sales in 2011 a result of recent events. Lower income demographics tend to be responsible for most of the off-trade consumption as locally-produced spirits are known to be of poor quality. The wealthier demographics mainly purchase spirits from duty free shops when travelling or through black market traders, who also offer delivery of duty-free items to the doorstep. Such illegal activity will continue to be a constraining factor on sales of local spirits as will the religious intolerance to spirits which are considered the most sinful of all alcoholic beverages.

PRODUCTION, IMPORTS AND EXPORTS

• ABC currently remains the sole licensed spirits manufacturer in Egypt. It produces ID Vodka, Auld Stag (whiskies), Butler’s (gin), Brandy Dinsmore, Cubana (rum) and Malvado. All these products are sold at relatively low prices through its Drinkie’s outlets, with the exception of Auld Stag, which retails at E£28 per 350ml bottle.

• ABC does not currently export any of its spirits products and is not likely to in the near future. The black market continues to supply higher-income earners with the company’s spirits acquired from via duty free shops, hindering legitimate spirits sales in Egypt.

• ABC recently upgraded its distilleries by installing new machines in order to compete with foreign brands and attempt to eliminate the black market. However, imported brands are of an extremely high standard and have become well renowned, making it impossible for local companies to compete.

• Future developments and investments in this market will depend on the upcoming elections and the country’s future path, both politically and economically. Currently the situation is unclear with many people remaining pessimistic, especially given the potential for the spread of further political and social unrest in neighbouring countries, which could have a significant impact on revenues from export operations.

COMPETITIVE LANDSCAPE

• Diageo Plc continued to lead spirits in Egypt with 41% of total volume sales in 2011. Diageo’s brands include Johnnie Walker Black Label, Johnnie Walker Red Label, and Johnnie Walker Blue Label. Johnnie Walker Red and Black Label alternate in popularity year-on-year, depending on what is more readily available, although both are extremely popular and preferred among all higher-income earners.

• Al Ahram Beverages Co (ABC) held the second largest share of 21% in 2011. Its spirits are mainly sold to less well off demographics as its products are of lower quality and are relatively inexpensive. Bolanachi Zibib remained its strongest brand with a 4% share. ABC introduced Malvado tequila in 2008 at E£45, with the unit price having since risen to E£47.

• The advertising of alcohol on TV and radio remains illegal in Egypt, although companies find ways round this to promote their products. One way is the sponsorship of large events and parties in order to spread word of their products. Advertisements of spirits are rarely found in magazines or on billboards as these products are not as well tolerated in Egypt as beer and wine.

• The Egyptian government has been attempting to crack down on black market retailers in order to help boost sales of local producers. However, it has been largely unsuccessful in its endeavours, finding it extremely difficult to apprehend them.

PROSPECTS

• Spirits is expected to continue to grow at a steady rate in both volume and constant value terms, reaching an anticipated 3.9 million litres and E£4.2 million in 2016. Companies will continuously try to boost sales by introducing new products, changing packaging and discreetly advertising their products in order to gain more market share.

• Whiskies is expected to remain the most popular product within spirits, accounting for constant value sales of E£3 million by 2016. This because more Egyptians have become accustomed to the taste, with women in particular beginning to drink whiskies with a mixer or with ice. This trend is unlikely to be reversed in the near future, although new vodka products may become increasingly popular.

• The black market will continue to be a hindrance to the growth of spirits sales in the future as the government is unlikely to crack down effectively on these sellers. It has so far proven extremely difficult for the government to curb sales of black market alcohol and, as a consequence, legitimate local producers will continue to suffer. Furthermore, the lack of government control over the black market, as well as religious intolerance, are also likely to discourage foreign competitors from entering the country

• All locally-produced spirits are expected to continue to sell at relatively low prices and to be of lower quality, making them popular with the less wealthy demographics. Higher-income earners and ex-pats will continue to purchase black market products due to their substantially higher quality and their highly recognised and respected names.

• Bourbon/other US whiskey is likely to grow at the highest rate, recording a 3% CAGR over the forecast period. This category will continue to be one of the most expensive in spirits and as such constant value sales will remain high in the future. However, in volume terms, bourbon/other UK whiskey will continue to register small volume sales, accounting for only 4% of overall whiskies sales in constant terms by 2016.

• Prices are expected to remain constant in spirits in Egypt as inflation will continue to be low and competition unlikely to develop. Companies will constantly try to keep prices low in order not to drive away its existing small consumer base and in the hope of attracting a wider audience with their new packaging and wider product ranges, which will also encompass new vodka flavours.

• The on-trade channel will remain the most popular for sales of spirits as these beverages are generally consumed in bars and nightclubs – a factor that explains why sales were so badly affected by the unrest in 2011 with Egyptians restricting their socialising activities and tourism grinding to a halt. Off-trade sales are mainly made through Drinkie’s and are sold to lower-income earners who purchase these cheaper, lower-quality products.

SECTOR BACKGROUND

Vodka, gin and other blended Scotch whisky price band methodology

Classification of these spirits products is based purely on pricing, taking a typical brand, usually the leading brand by volume as the benchmark price, which is indexed as 100%. The benchmark brand will usually be a standard-priced brand. There will be exceptions, however, whereby an economy brand (likely for vodka in some countries in Eastern Europe) or a premium brand (typically the case for Scotch whisky in the US) is used as the benchmark brand. Refer to the guidelines below for further detail.

Based on benchmark brand being standard:

• Super-Premium: 30% or higher than price of the benchmark brand

• Premium: 10-29.99% higher price than benchmark brand

• Standard: Between 9.99% lower or 9.99% higher than benchmark brand

• Economy: At least 10% lower than the price of benchmark brand

Based on benchmark brand being economy

• Super-Premium: 50% or higher than price of the benchmark brand

• Premium: 30-49.99% higher than price of benchmark brand

• Standard: Between 10% and 29.99% higher than price of benchmark brand

• Economy: anything lower or up to 9.99% higher than the price of the benchmark brand

Based on benchmark brand being premium:

• Super-premium: 10% or higher than benchmark brand

• Premium: Any brand that is up to 9.99% higher or 9.99% lower than benchmark brand

• Standard: Between 10% and 29.99% cheaper than the benchmark brand

• Economy: Anything 30%+ cheaper than the benchmark brand.

Based on benchmark brand being super-premium:

• Super-premium: Anything higher or up to 9.99% lower than the benchmark brand

• Premium: 10% to 29.99% lower than benchmark brand

• Standard: 30% to 49.99% lower than benchmark brand

• Economy: 50%+ lower than benchmark brand.

CATEGORY DATA

HEADLINES

• Wine sales reach 11 million litres and E£2.2 billion in 2011

• Fortified wine and vermouth and non-grape wine register a combined share of only 3% of value sales in 2011

• Still light grape wine dominates wine sales with 10.5 million litres of total sales

• Champagne witnesses the strongest growth of 34% in value terms in 2011

• Al Ahram Beverages Co (ABC) continues to dominate wine sales with a 70% volume share in 2011

• Wine is expected to register a CAGR of 9% in volume terms over the forecast period to reach 17 million litres in 2016

TRENDS

• Wine sales have grown rapidly over the past few years and in 2011 wine remained one of the fastest-growing categories within the alcoholic drinks market for yet another consecutive year. This was despite an overall drop in volume and value sales across all categories since the political and economic turmoil and its subsequent toll on tourism and hospitality in particular. Competition has rapidly intensified thanks to new products and packaging and a developing awareness of wine in the Egyptian culture.

• In 2011, wine grew at a rate of 9% in volume terms compared to a 12% CAGR recorded over the review period, while value sales rose by 15% compared to a 22% review period CAGR. Despite the recent turmoil, wine can safely be expected to gain further popularity in the Egyptian market providing a moderate government comes to the fore after the 2012 elections.

• Champagne witnessed the highest growth rates, although this was from an extremely low base. Still red wine also continued to witness strong growth, up 5% in volume and 17% in value terms. However, despite the impressive performance, it represents a decline from the previous year’s highs of 13% and 24% respectively in response to the country’s uprising. Red wine has been the most popular type of wine since its entry into the market due to its preferred taste, appealing to local palettes. It is also considered to be a healthier option among wealthier demographics who are aware that moderate consumption is considered beneficial for heart health. Nonetheless, white wine sales have picked up dramatically over recent years, with four million litres sold in 2011 compared to six million litres of still red wine.

• Red and white wine products remain the most popular types of wine sold in Egypt, especially through on-trade outlets. Most higher-income Egyptians tend to drink at least one glass of wine with dinner and sometimes also at lunch, and often outside the home. These large volume sales originate from restaurants, bars, nightclubs and hotels, which explains the rapid decline in 2011 over the previous year, with the horeca channel being particularly badly hampered by the almost total halt in tourism during and just after the uprising. Red wine is also traditionally more expensive than white wine, resulting in the former’s higher value sales over the years.

• Off-trade volume sales remained much lower than on-trade in 2011, at 2 million litres compared to 9 million litres, although the former experienced higher growth during the year with consumers unable to frequent their favourite restaurants and on-trade establishments because of the curfew, lack of street safety and security and ongoing disruption. As many Egyptians continued to demand wine with their meals, sales via the off-trade rose by 5% compared to only 4% for the on-trade. Furthermore, a large number of consumers also purchased via the black market as well as from duty free shops when travelling. Many black market suppliers actually deliver imported wine to householders’ doors at prices within the financial reach of many wealthier Egyptians. As such, the black market also continued to hamper legitimate wine, particularly on-trade sales.

• Pinot Blanc and Cabernet Sauvignon are currently the only types of grapes cultivated in Egypt with a small selection of wines produced near Alexandria. Brands in the Pinot Blanc range include Omar Khayyam (white), Chateau Grand Marquis (white), Obelisk (white), Shahrazade (white) and Jardin du Nil (white). Cabernet Sauvignon wines include Grand Marquis (red), Omar Khayyam (red), Chateau Grand Marquis (red), Obelisk (red), Chateau des Reves (red), Shahrazade (red) and Jardin du Nil (red). These are currently the most popular wines sold in the country. However, some restaurants, especially Lebanese, offer Lebanese wines, such as Ksara, Musare or Kefraya, which are internationally renowned but which are also expensive in Egypt.

• Rosé wine has become slightly more popular in recent years, although it remains a very small category. Around 200,000 litres were sold each year of the review period, reaching a value of E£38 million in 2011. Most rosé wine products are bought by higher-income earners who are aware of this type of wine from their travels abroad and from exposure to foreign cultures.

• All wine products are sold in glass bottles with a cork. Screw tops and other types of bottles have not been introduced into the Egyptian market as there is still no demand for this type of convenience. However, should the market continue to develop at this rate, advancements in bottling and storage methods are likely to take place.

PRODUCTION, IMPORTS AND EXPORTS

• Al Ahram Beverages Co (ABC) and EgyBev are the two main producers of wine in the country. Both companies have upgraded their wineries in order to produce higher-quality wines. As the black market continues to develop, companies have to ensure they can meet market demand by keeping their quality high, especially given the dubious quality and provenance of these black market alternatives.

• Imports are almost negligible in Egypt due to the 1,800% import tax placed on them. As such, these products are only found in select restaurants and five star hotels and are sold at extremely high prices. The black market continues to be a strong source of imported wines, mainly in the form of duty-free wines. As this illegal trade does not pay tax it can afford to sell these higher quality products at relatively cheap prices, even delivering them to customers’ homes.

COMPETITIVE LANDSCAPE

• Al Ahram Beverages Co (ABC) continued to lead wine with a 70% total volume share in 2011. It has been the longest standing player in the market and has developed renowned brand names, including Aida, Cape Bay, Chateau des Reves, Grand Marquis, Obelisk and Omar Khayyam.

• Omar Khayyam remained the most popular brand, accounting for a 30% share of wine volume sales in 2011. This brand has a longstanding presence and continues to be competitively priced, making it attractive to many Egyptians and less the preserve of higher-income earners.

• EgyBev has been extremely active in wine, realising the growing demand for these products and trying to create some diversity. Its brands include Jardin du Nil and Shahrazade, with the latter accounting for 14% of total wine sales in 2011. EgyBev also recently launched a new brand, Beau Soleil, although it is still too early to determine how well it is performing.

• Packaging remains the same in Egypt, with bottles with corks being the sole format available. The wine category is still in an early growth phase and may not be ready to incorporate screw tops and other types of packaging as yet.

• Mid-priced red wines remain the most popular, accounting for almost 60% of off-trade volume sales. These wines are priced between E£32 and E£45. Domestic white wines are the most popular, accounting for 82% of total volume sales, while fortified wines accounts for 14% and premium wines 4%. Domestic wines are the most popular within rosé and red wines, accounting for 82% shares in both categories.

• There were no merger or acquisitions in wine in 2011, although such activity will become more prevalent and create a competitive environment for both wine producers and consumers.

PROSPECTS

• Wine is expected to continue to grow in both volume and constant value terms, registering CAGRs of 9% and 10% respectively. These growth rates, despite being hampered by the recent turmoil, will pick up pace once again as competition will continue to intensify and wine will become more popular throughout Egypt. Of course, like all other categories of alcoholic drinks, future sales of wine will very much depend on the outcome of the upcoming presidential and parliamentary elections and the prevailing religious attitude to alcohol consumption.

• Still red wine is likely to remain the most popular type in volume and constant value terms, reaching an anticipated 10.3 million litres and E£2.2 billion in 2016. This will equate to CAGRs of 11% and 12% respectively. Still white wine is expected to register a CAGR of 7% in volume terms to reach 6 million litres in 2016.

• Still rosé wine should register a CAGR of 7% with sales reaching 300,000 litres in 2016. Still rosé wine will continue to be the most popular wine category among higher-income earners as it is these demographics who are more aware of this type of wine. The majority of wine sales are in the E£30-E£40 bracket, a trend that is likely to continue into the forecast period.

• Al Ahram Beverages Co (ABC) is expected to continue dominating wine with its large range of brands, although EgyBev could well erode some of its share thanks to its new brands and packaging. The company’s Omar Khayyam and Obelisk brands are likely to remain by far the most popular between 2011 and 2016.

• The black market will remain a hindrance to legal wine sales in Egypt as black market imported wines are of a higher quality and are sold at competitive prices. Most higher-income earners prefer to serve imported wine at home when they have guests, and the black market is convenient, efficient as well as affordable. This is unlikely to change in the near future as the government will have a difficult time cracking down on illegal traders.

• No new product launches are currently expected onto the market. However both ABC and EgyBev will remain competitive by keeping their prices down, being able to do so only if inflation is kept under control. Both players will also regularly update their packaging and regularly advertise their products.

CATEGORY DATA

For each category and subcategory you will receive the following data in Excel format:

From Passport

• Market sizes
• Company shares
• Brand shares
• Distribution
• Distribution
• Exports by country - value
• Exports by country - volume
• Flavoured vs non-flavoured vodka
• Imports by country - value
• Imports by country - volume
• Off-trade vs on-trade
• Premium sales analysis
• Pricing
• Products by ingredient
• Products by ingredient
• Wine by grape type
• Wine by price
• Wine quality classification

Market size details:

• Off-trade volume
• Off-trade volume % growth
• Off-trade volume per capita
• On-trade volume
• On-trade volume % growth
• On-trade volume per capita
• Total volume
• Total volume % growth
• Total volume per capita
• Off-trade value retail selling price % growth
• Off-trade value retail selling price local currency, USD, EUR, GBP, CHF, JPY
• Off-trade value retail selling price per capita local currency, USD, EUR, GBP, CHF, JPY
• On-trade value retail selling price % growth
• On-trade value retail selling price local currency, USD, EUR, GBP, CHF, JPY
• On-trade value retail selling price per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price % growth
• Total value retail selling price local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price per capita local currency, USD, EUR, GBP, CHF, JPY
• Off-trade value retail selling price real (constant 2008) prices % growth
• Off-trade value retail selling price real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Off-trade value retail selling price real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• On-trade value retail selling price real (constant 2008) prices % growth
• On-trade value retail selling price real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• On-trade value retail selling price real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price real (constant 2008) prices % growth
• Total value retail selling price real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Off-trade value manufacturer selling price % growth
• Off-trade value manufacturer selling price local currency, USD, EUR, GBP, CHF, JPY
• Off-trade value manufacturer selling price per capita local currency, USD, EUR, GBP, CHF, JPY
• On-trade value manufacturer selling price % growth
• On-trade value manufacturer selling price local currency, USD, EUR, GBP, CHF, JPY
• On-trade value manufacturer selling price per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price % growth
• Total value manufacturer selling price local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price per capita local currency, USD, EUR, GBP, CHF, JPY
• Off-trade value manufacturer selling price real (constant 2008) prices % growth
• Off-trade value manufacturer selling price real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Off-trade value manufacturer selling price real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• On-trade value manufacturer selling price real (constant 2008) prices % growth
• On-trade value manufacturer selling price real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• On-trade value manufacturer selling price real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price real (constant 2008) prices % growth
• Total value manufacturer selling price real (constant 2008) prices local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price real (constant 2008) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Off-trade rtd volume
• Off-trade rtd volume % growth
• Off-trade rtd volume per capita
• On-trade rtd volume
• On-trade rtd volume % growth
• On-trade rtd volume per capita
• Total rtd volume
• Total rtd volume % growth
• Total rtd volume per capita
• Off-trade volume litres of pure alcohol
• Off-trade volume litres of pure alcohol % growth
• Off-trade volume litres of pure alcohol per capita
• On-trade volume litres of pure alcohol
• On-trade volume litres of pure alcohol % growth
• On-trade volume litres of pure alcohol per capita
• Total volume litres of pure alcohol
• Total volume litres of pure alcohol % growth
• Total volume litres of pure alcohol per capita
• Off-trade value retail selling price nominal (current) prices % growth
• Off-trade value retail selling price nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Off-trade value retail selling price nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• On-trade value retail selling price nominal (current) prices % growth
• On-trade value retail selling price nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• On-trade value retail selling price nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price nominal (current) prices % growth
• Total value retail selling price nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Total value retail selling price nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Off-trade value manufacturer selling price nominal (current) prices % growth
• Off-trade value manufacturer selling price nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Off-trade value manufacturer selling price nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• On-trade value manufacturer selling price nominal (current) prices % growth
• On-trade value manufacturer selling price nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• On-trade value manufacturer selling price nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price nominal (current) prices % growth
• Total value manufacturer selling price nominal (current) prices local currency, USD, EUR, GBP, CHF, JPY
• Total value manufacturer selling price nominal (current) prices per capita local currency, USD, EUR, GBP, CHF, JPY

Global insight and local knowledge

With 40 years’ experience of developed and emerging markets, Euromonitor International’s research method is built on a unique combination of specialist industry knowledge and in-country research expertise.

This approach is what enables us to achieve our goal of building a market consensus view of size, shape and trends across the full distribution universe of each category. We factor in whichever channels are relevant, from large-scale grocery to direct sellers, from discount stores to local mom-and-pop outlets.

Industry specialists

Each industry we cover is managed by an Industry Manager and team of Industry Analysts who research and report on their specialist categories all year round.

Our collaborative approach to research means that these industry teams are in constant dialogue with industry players and opinion formers. The planning of our research programmes reflects latest market trends and industry events. In completing each update project, this provides invaluable input to the testing, review and finalisation of our data.

The specialist in-house teams bring together findings from all stages of the annual research process. They work closely with in-country analysts, assess and challenge data and exercise final editorial control over the publication of new data and analysis.

Country and regional analysts

Our in-country analyst network is managed by country and regional analysts in our offices around the world. Working closely with each in-country team, the regional research management team ensures that all country researchers are well schooled in best practices, from the information collected in store checks, to the dialogue we build in trade surveys. Our country analysts ensure that national reports explain the data trends and provide clear insights into the local market’s dynamics.

In-country research network

To deliver fresh insights every year in countries all around the world, we believe the strongest approach is to use analysts on the ground. They bring fluency in local language, physical proximity to the best sources, an ability to engage directly with local industry contacts, and an awareness of how the products and services we study are advertised, sold and consumed. These are essential parts of our ability to report incisively on these markets.

Our research methods

Each Euromonitor International industry report is based on a core set of research techniques:

Desk research

With industry events, corporate activity, trends and new product introductions tracked year round by our industry team, desk research provides a starting point for the in-country research programme. Our in-country researchers will access the following sources:

• National statistics offices governmental and official sources
• National and international trade press
• National and international trade associations
• Industry study groups and other semi-official sources
• Company financials and annual reports
• Broker reports
• Online databases
• The financial, business and mainstream press

Accessing sources is only the first step. The ability to interpret and reconcile often conflicting information across multiple sources is a key aspect of the added value we provide.

Store checks

Store checks are an integral part of our methods for product industries. Carried out on the ground across a relevant mix of channels, the information gained provides first-hand insights into the products we are researching, specifically:

• Place: We track products in all relevant channels, selective and mass, store and non-store
• Product: What are innovations in products, pack sizes and formats?
• Price: What are brand price variations across channels, how do private label’s prices compare to those of branded goods?
• Promotion: What are marketing and merchandising trends, offers, discounts and tie-ins?

Findings are cross-referenced with brand share data analysis. The results, combined with the findings of desk research, provide a strong basis for identifying key areas of questioning to take forward into our trade survey.

Trade survey

Interaction with global players at corporate HQ and regional levels is complemented by unique local data and insights from our in-country trade surveys around the world. Through the high profile of the Euromonitor International brand, we are able to talk directly to a wide range of sources and therefore inform our analysis with the knowledge and opinions of the leading operators in the market.

Trade surveys allow us to:

• Fill gaps in available published data per company
• Generate a consensus view of the size, structure and strategic direction of the category
• Access year-in-progress data where published sources are out of date
• Evaluate the experts’ views on current trends and market developments

In building our composite industry view, we engage with a variety of personnel in key players at all points of the supply chain: materials suppliers, manufacturers, distributors, retailers and service operators. We also interview desk research sources: industry associations; study groups; and third party observers from the trade and financial press.

Our objective is to engage in conversation with trade sources in which we exchange ideas and views on the industry, sharing our work-in-progress findings on supply/demand dynamics and potential. This dialogue enhances both parties’ understanding of the local market. The scope and reach of our trade survey also serves to eliminate bias (intentional and unintentional) from any single source.

Company analysis

At a global level, our company research combines our mix of industry interaction and use of secondary sources such as annual accounts, broker reports, financial press and databases. From a data perspective, the aim is to build “top-down” estimates of major players’ total global and regional sales.

At a country level, in line with local reporting requirements, we access annual accounts, national-specific company databases and local company websites. These are all invaluable sources as we build a view of each domestic player’s size and position within very specific categories of the industry.

Forecasts

Data projections and future performance analysis are key elements of Euromonitor International’s market intelligence. Working with historic trends of 15 years or more, a key aspect of our trade survey is to engage industry insider views of the next five years. Will volumes maintain their historic trend? Will price increases or falls of recent years continue, accelerate or slow down? Will increasing demand for one product cannibalise sales of another?

Forecasts represent many of the essential conclusions we have reached about the current state of the market, how it works and how it behaves under different macro and micro conditions. Our written analysis will state the assumptions and the trade opinion behind whether our predictions are optimistic or pessimistic, so that clients can use our statistical forecasts with confidence.

Data validation

All data is subjected to an exhaustive review process, at country, regional and global levels.

The interpretation and review of sources and data inputs forms a central part of the collaboration between industry teams and country researchers. Numbers are delivered to regional and global offices with an audit trail of sources and calculations to allow for a thorough evaluation of data sense and integrity.

Upon completion of the country review phase, data is then reviewed on a comparative basis at regional and then at a global level. Comparative checks are carried out on per capita consumption and spending levels, growth rates, patterns of category and subcategory breakdowns and distribution of sales by channel. Top-down estimates are reviewed against bottom-up regional and global market and company sales totals.

Where marked differences are seen between proximate country markets or ones at similar developmental levels, supplementary research is conducted in the relevant countries to confirm and/or amend those findings. This process ensures international comparability across the database, that consistent category and subcategory definitions have been used and that all data has been correctly tested. We make sure that possible discrepancies between different published sources have been reconciled and that our interpretation of opinion and expectation from each country’s trade sources has been applied to form a coherent international pattern.

Market analysis

Another integral part of all our research programmes is that all Euromonitor International data is accompanied by clear written analysis. From a research perspective, this explains and substantiates data findings. From a client perspective, this offers unique insights into local consumption trends, routes to market, brand preferences, channel dynamics and future trends.

Our country level analysis also provides invaluable input into the ability of our central industry specialist teams to marry local insights with strategic conclusions on the direction of the market regionally and globally.