Luxury Alcoholic Drinks: The Spirit of Premiumisation
Strategy Briefing
About This Report
Oct 2016In more recent years, distillers have increased their focus on value sales as volumes, particularly in core mature markets, slowed down. This has meant a greater emphasis on premium and above priced spirits. This global briefing looks the key countries for these products such as China and the US but also other markets as the reach of premium and above spirits broadens.
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Luxury Alcoholic Drinks: The Spirit of Premiumisation
High disposable income important but other factors also play role
The number of households with high disposable income and economic growth are vital elements in determining the capacity for a country to consume premium and luxury spirits. However, it is not essential as a small but very affluent economic elite offers opportunities as do cultural factors in different markets.
China dominates premium and above spirits consumption
Thanks to its size and popularity of its local spirit, baijiu, China dominates premium and above spirits sales in both volume and value terms. However, the country’s strength is focused on this one category, which suffered badly between 2010-2015 due to a crackdown on corruption but will recover as consumption habits adapt.
US is second largest market and offers greater opportunity
While only around a 10th of the size of the Chinese high-end spirits market, the US offers greater opportunity for growth thanks to a broader range of categories seeing growth in premium and above spirits.
Broadening geographic reach
A combination of growing prosperity, but equally importantly, changing consumer habits, has led to greater opportunities in a wider range of markets, both mature and emerging.
Introduction
Scope
Key findings
Consumer Expenditure
China dominates premium and above spirits
Demand for premium related to income
Wealth disparity helps too
US
Premium diversity in the US
Growing number of wealthy boosts prospects for high-end spirits
US is the power behind cognac
Premiumisation drives the largest single malt Scotch market
Super premium bourbon/other US whiskey is key category driver
US tequila (and mezcal ) a paradigm of premiumisation
China
China’s growing wealth
Growing individual wealth in China
Baijiu in China
Cognac in China
Other blended Scotch whisky in China
Single malt Scotch whisky in China
Rest of The World
Emerging markets offer further dynamism, as developed recover
Cognac - commoditised and declining in Western Europe
Trading up to counter discounting - UK cognac
The creation of super premium gin
English gin expands outside core European markets
Rise of luxury brands in Spain
Australian premiumisation if not volume growth
Changing habits impact South Korean Scotch
Super premium vodka rises above Brazil’s economic woes
Vietnam follows China in cognac
High-end cognac drives category in Taiwan
Wealthy niche drives rise of super premium in Colombia
Mexico - growing premiumisation
Rich elite drives African growth
Russia - luxury over performs
Conclusion
Luxury growing and broadening in the future
Appendix
Definitions
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