Affected by the extraordinary levels of economic uncertainty in Costa Rica during the second half of 2018, a broader base of middle- and lower-income consumers adopted more cautious spending habits. In this context, economy proposals gained momentum amongst younger adults and lower-income local consumers.
Ranging from craft beers, to new brand extensions in spirits targeted towards millennials, differentiated value proposals continued to gain momentum across most alcoholic drinks categories during 2018. The expanding base of upper- and middle-income millennials demanded affordable yet higher-quality alcoholic drinks options.
Despite the growing offer of new imported value proposals, including direct imports by Walmart, traditional domestic players (Florida Bebidas, Fábrica Nacional de Licores (FANAL) and Centenario Internacional) remained ahead in both volume and value terms during 2018, taking advantage of their top-of-mind brand awareness, and strong economies of scale in terms of manufacturing, marketing and distribution. Point-of-sale availability was associated with the capacity of these players to reach a vast number of off-trade and on-trade establishments across the country, with control of refrigeration space in both traditional and modern grocery retailers remaining a clear competitive advantage for Florida Bebidas; reflected in its dominance in beer and RTDs.
Chained modern grocery retailers such as fascias from Walmart, along with more specialised retail proposals, such as the local high-end supermarket Automercado, continued to gain momentum in the distribution of alcoholic drinks during 2018. Promotional activities, along with exclusive product offers, a wide product assortment and wide availability, consolidated as major sales drivers for most alcoholic drinks categories.
Alcoholic drinks is expected to continue to see total volume growth over the forecast period, with higher growth off-trade than on-trade. Even though it is anticipated that most local consumers will remain very cautious about their expenditure on non-essential goods and experiences during the next five years, it is expected that new value proposals and additional levels of innovation will be seen in the forecast period.
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This industry report originates from Passport, our Alcoholic Drinks market research database.