Higher excise tax triggers different reactions
Beer was most affected by the excise tax hike during the review period. Total volume sales fell strongly in 2013 as consumers either stopped drinking beer or decreased their purchases. Total volume sales of spirits were also negatively affected but key brand launches mitigated the decline, to a certain extent. Wine continued to post strong total volume sales growth, as most wine consumers are less likely to be affected by price increases.
At-home entertaining is a more budget-friendly option for consumers
Despite higher prices in off-trade channels, consumers are slowly seeing the value of buying alcoholic drinks from grocery retailers and consuming products at home. Off-trade sales are generally stronger than on-trade sales. At-home entertaining is preferred, particularly by women. People like to socialise in the comfort of their home while they can control their consumption and budget. Another driver is the higher level of safety compared with drinking in public places. Although the ambience in bars and clubs cannot be replicated at home, consumers are willing to forego this in exchange for lower expenditure, comfort and safety.
Bel Mondo Italia Corp maintains total volume sales growth despite higher taxation
Despite the revision in the excise tax structure, which has brought about significant increases in end prices, the wine manufacturer Bel Mondo Italia Corp registered good total volume sales growth throughout the review period. The ongoing affordability of its Novellino brand and a strong distribution system allowed the company to increase total volume sales despite higher prices. The key middle-class target audience continued to buy the brand, remaining indifferent to price movements. Bel Mondo Italia Corp benefited as wine was less impacted by changes in the dynamics of alcoholic drinks in the Philippines.
Manufacturers launch new products to open untapped consumer groups
Wine, traditionally a premium type attracting more mature consumers, was recently opened to young people with the launch of Sangria Novellino. The price of the new product was set at a standard rate and the brand has been made trendier to entice the young earners in Metro Manila. Brandy, on the other hand, has been opened-up to middle-class consumers through the launch of Emperador Deluxe. Emperador, the leading brand, caters to lower-income groups, but the new launch opens the gates to the growing middle class in the Philippines, who are able to spend more for a better quality product.
Strong branding and continuous innovation are the keys to recovery
Companies are set to continue with their branding strategies and new product launches despite their losses during the review period. Market research is expected to help companies determine their competitive edges as all brands have been affected by higher excise tax. Continuous product innovations and strong branding are likely to aid recovery as companies experience the birth pains of the new excise tax structure. During the forecast period, the industry is predicted to recover slowly, but companies with a strong brand image and known for innovation likely to revive faster than others.
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The Alcoholic Drinks in Philippines 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 Philippines?
- What are the major brands in Philippines?
- 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.