Overall consumption of spirits declined significantly during the COVID-19 pandemic, with all types except shochu/soju recording steep falls as gains in the off-trade channel were unable to offset the devastating losses in the on-trade, where sales of spirits experienced substantial declines thanks to a number of measures to fight the COVID-19 pandemic imposed by the Hong Kong, China government. In order to comply with the lockdown measures, on-trade outlets such as bars and restaurants were forced to shorten their business hours for eat-in and drink-in sales and even to close at the height of the local outbreak in March to April, July to August and November to December.
Consumer interest in Korean goods has been on the rise in much of APAC, including Hong Kong, China for quite some time thanks to growing Korean soft power in pop culture such as K-drama and K-pop. The popularity of Korean culture in Hong Kong, China has been driven by the 2005 Korean drama, Dae Jang Geum, and more recently by the 2014 drama, My Love from the Star.
Brandy and Cognac are increasingly suffering from a perception of being old-fashioned, while the reductions in on-trade drinking occasions and mainland tourists also contributed to the sharp decline of these drinks in 2020, with brandy and Cognac recording one of the steepest declines in total volume sales among the major spirits areas.
Spirits is expected to return to strong total volume growth as early as 2021, with good development over the remainder of the forecast period. As on-trade channels partially return to some semblance of normality, on-trade volumes will witness minor growth in 2021, followed by strong double-digit growth in 2022 as the COVID-19 pandemic begins to recede.
Whiskies have been the most popular spirits in Hong Kong for many years and recorded strong retail volume growth during the pandemic in 2020, capitalising on the shift away from the on-trade. The whisky culture is strong in Hong Kong, China and the spirit performed well in retail channels during the crisis as consumers had more time and money to explore the different types of whiskies, with many purchasing bottles to keep at home during the long periods of home seclusion.
Although previous signs indicated that rum would be the next big thing in spirits in Hong Kong, China, the COVID-19 pandemic seems to have changed its prospects somewhat. Rum was generating interest during the turbulent pre-pandemic environment as the spirit undergoes an ageing process which brings out the different characteristics of the barrel, whilst also providing a story behind the product.
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This report originates from Passport, our Spirits research and analysis database.
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