The United Arab Emirates is a popular holiday destination and commerce centre, with the number of international visitors continuing to rise, thus contributing to growth within fine wines/champagne and spirits. However, the fact that consumers tend to drink luxury alcohol outside the home is limiting retail sales.
In October 2017, an excise tax of 100% was introduced for tobacco and energy drinks, while a 50% tax was introduced for soft drinks. This is the first example of such a tax in the United Arab Emirates, with the next wave set for January 2018, when a 5% Value Added Tax (VAT) will be applied across the majority of products and services.
Fine wines/champagne and spirits off-trade distribution is restricted to licenced outlets, mainly the MMI and African + Eastern chains. Outlets are usually positioned next to supermarkets/hypermarkets or in neighbourhoods, although windows are covered.
Leading international players like Diageo, Pernod Ricard Group and LVMH Moët Hennessy Louis Vuitton lead sales in fine wines/champagne and spirits. Diageo’s Johnnie Walker, Pernod Ricard’s Chivas Regal and LVMH’s Moët & Chandon and Dom Pérignon are regularly purchased by residents off-trade for home consumption on special occasions.
As strict laws regarding alcohol advertising are in place, strong international publicity campaigns and airport free-zone promotions are the major advertising channels for players in this area. Oktoberfest has gained attention among a wide range of drinkers, with bars and clubs like Irish Village and Barasti holding regular events in Dubai.
Major manufacturers of luxury alcoholic drinks also work with local players to organise exclusive degustation events and informal tastings in major cities in a bid to increase awareness of high-quality alcoholic drinks and brand recognition. Over the forecast period, this trend should continue, with expats, especially Russians, supporting sales of fine wines/champagne and spirits in the country.
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