Complete ban on alcohol makes non-alcoholic beer the only legally available product
Alcoholic drinks sales in Iran is entirely accounted for by non-alcoholic beer, as Islamic law forbids the consumption, manufacturing and trading of alcohol. These regulations have however created strong demand for non-alcoholic beer, which complies with Islamic law and provides another alternative to carbonates. Anti-smuggling programmes by the Iranian Government, coupled with awareness campaigns against the consumption of cola carbonates and campaigns encouraging the drinking of non-alcoholic beer, further boosted demand in 2012. More 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.
Strong demand encourages illicit sales of alcoholic drinks
Although the sale or consumption of alcoholic drinks is strictly forbidden by the state, there is huge demand for such products. Under-the-counter sales rose sharply in the review period and volume sales reached an all-time high on the black market. This is partly due to the large young generation, with nearly three-quarters of the Iranian population being under the age of 30-years-old. In addition, a rising unemployment rate, runaway inflation and a greater interest in Western lifestyles all played prime roles in the growth of black market alcoholic drinks sales in Iran. The consumption of alcoholic drinks 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, alcoholic drinks can also easily be purchased in the countries bordering Iran. Fluctuations in the value of the national currency towards the end of the review period however resulted in a sudden jump in unit prices for smuggled brands. This made many smuggled alcoholic drinks far too expensive for many consumers, with many of these consumers consequently switching to making alcoholic drinks at home.
State-owned Behnoush Iran remains indisputable leader
Non-alcoholic beer is highly developed and well-established in Iran. This product area benefits from the very active performance of Behnoush Iran, a local manufacturer that accounts for the majority of volume sales of non-alcoholic beer. Although young Iranians are the company’s main target group, the company is also trying to tap into other demographic groups by promoting non-alcoholic beer and malt drinks as healthy beverages for pregnant women. The company was however challenged continuously during the review period by newcomers such as Arpanoosh and Sirang Koohrang, which introduced new flavours and packaging formats and thus increased their share
Off-trade dominates sales although on-trade saw more dynamic growth
Sales of non-alcoholic beer mainly occur in off-trade channels, especially the independent small grocers that are the dominant retail channel in Iran. However, the emergence and rapid expansion of hypermarkets and supermarkets during the review period resulted in an increase in these channels’ contribution to sales. Due to the rapid trend of westernisation, urban families are increasingly eating in on-trade outlets such as fast food outlets. This meant rapid growth in on-trade sales for this type of drink, despite the fact that prices grew significantly in 2012 over the previous year. However, fast food outlets remained very popular due to offering more affordable prices in comparison to other types of consumer foodservice.
Economic turbulence and maturity of non-alcoholic beer will slow growth
The future of non-alcoholic beer will continue to be shaped by the political and economic situation of the country. The Islamic government is expected to continue to rule Iran. This means that a ban on the manufacture and consumption of alcoholic drinks will remain in place. As a result, non-alcoholic beer will remain the only significant product in alcoholic drinks in the country. Demand is expected to continue to grow in the forecast period but at a much slower pace compared to the review period, as non-alcoholic beer becomes increasingly mature. Inflation will also continue to be very high during the forecast period. This will also impact growth, as purchasing power will continue to fall as a direct result of continued high inflation and consequently high unit prices.
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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.