Complete ban on alcoholic drinks means non-alcoholic beer is the only legally available product
The alcoholic drinks market in Iran comprises only non-alcoholic beer as Islamic law forbids the consumption, manufacture and trade of alcohol in any form among Muslims. Such regulations have created very strong demand for non-alcoholic beer. Anti-smuggling initiatives from the Iranian government, coupled with health awareness campaigns about the consumption of cola carbonates and campaigns encouraging the drinking of non-alcoholic beer, further boosted demand in 2014. An increasing number of young adults in Iran are switching to non-alcoholic beer following widespread media coverage regarding its health benefits. These health benefits play a significant part in the promotional activities of most major companies.
Smuggling of alcoholic drinks remains a significant trend in 2014
Although the sale and consumption of alcoholic drinks are strictly forbidden by the state, there is huge demand for such products. Under-the-counter sales rose sharply in 2014, with volumes reaching an all-time high on the black market. The large population of young consumers (nearly three-quarters of the Iranian population are under the age of 40), rising unemployment, runaway inflation and a greater interest in Western lifestyles have all played prime roles in the growth of black market alcoholic drinks sales in Iran. The consumption of alcoholic beverages is common among young people, especially at weddings and other parties. According to official statistics, the number of illegal importers is increasing year-on-year. Alcohol is commonly imported from neighbouring countries such as Turkey, Armenia, Afghanistan, Iraqi Kurdistan and Russia. Moreover, alcohol can easily be purchased in the regions bordering Iran. However, despite booming black market trade in 2014, high inflation and declining purchasing power damaged sales of black market alcohol as the unit prices of smuggled items remained very high, which meant that many people were unable to afford them, with many thus reverting to homemade alcoholic products.
State-owned Behnoush Iran Co remains the undisputed market leader
Non-alcoholic beer is a well-developed and established category in Iran. It benefits from the very active operations of Behnoush Iran Co, a local manufacturer commanding the majority of volume sales in non-alcoholic beer. Although young Iranians are the company’s main target group, it also tries to tap into other demographics by promoting non-alcoholic beer and malt drinks as good beverages for other consumer groups such as pregnant women. The company has been challenged continuously in recent years by several newcomers which have introduced new flavours and packaging formats in an effort to gain share. In 2014, the company’s main competitor was Arpanoosh Co.
Off-trade channel dominates sales but the on-trade is more dynamic in 2014
The majority of non-alcoholic beer is sold in the off-trade channel, especially by independent small grocers, which dominate the retail landscape in Iran. However, the recent emergence and rapid expansion of hypermarkets and supermarkets has resulted in an increase in share for these channels. It is worth mentioning that due to rapid westernisation many urban families are eating out in on-trade establishments like fast food outlets and restaurants more frequently, which has led to rapid growth in sales in the on-trade for this type of drink.
General economic situation and increasing maturity of non-alcoholic beer set to affect the market’s performance over the forecast period
The future outlook for non-alcoholic beer is very dependent on the political and economic situation in the country. The Islamic government is expected to rule the country for the foreseeable future, which means the ban on alcoholic drinks will continue. Therefore, non-alcoholic beer will remain the only available category in alcoholic drinks. Demand is expected to continue to grow but at a slower pace compared to the review period as this category has passed its initial stages and is now heading towards maturity. Inflation, on the other hand, is expected to remain high, thus having a negative impact on the purchasing power of consumers and limiting sales growth in the country.
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The Alcoholic Drinks in Iran 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 Iran?
- What are the major brands in Iran?
- 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?
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This industry report originates from Passport, our Alcoholic Drinks market research database.