Spirits in Kazakhstan

PRE-COVID-19 PERFORMANCE

Premiumisation increasingly important as young consumers seek lighter beverages

In 2019, the healthy lifestyle trend continued to gain momentum in terms of sports uptake and decreasing alcoholic drinks consumption in Kazakhstan, especially among the population under the age of 30. These consumers are increasingly focusing on new tasting experiences, opting to drink smaller amounts of alcohol than older generations.

Rising penchant for quality reflected in choice of vodka

Vodka production in the country is tied to imported ingredients and packaging, generally from Russia. After Kazakhstan’s national currency devaluation in 2018, prices for all imported production increased by a minimum of 15% in current value terms.

Brandy, an oasis of lower excise – for now

Excise on brandy was 10 times lower than excise on vodka and other spirits in 2019. Legally operating local vodka producers therefore switched to low-cost brandy production in 2018-2019.

2020 AND BEYOND

COVID-19 impact

On-trade volume sales of spirits are expected to fall by 41% in 2020, in light of the impact of COVID-19. This exacerbates heavily the 1% decrease forecast for 2020 during research conducted in May 2019, ie before the spread of COVID-19.

Affected products within spirits

In March 2020, gin sales increased by 126% and rum by 43% through modern retailing, because of consumer stockpiling and currency devaluation (consumers were able to purchase imported drinks at the previous prices), compared with March 2019. This suggests that the local cocktail culture was initially still being supported by consumers during the pandemic.

Recovery and opportunities

In 2020, local brandy is predicted to continue to take share from economy vodka as the cheapest of spirits, due to its excise rate being 10 times lower. Consumers are understandably highly price-sensitive for the time being, because of both currency devaluation and COVID-19-related job reduction/losses.

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