In December 2017, the Malaysian government enforced a new ruling to impede alcohol misuse encouraged by a wide availability of cheap, compounded hard liquor sold in small pack sizes. Under the new Regulation 386A, compounded hard liquor can only be sold in glass bottles with minimum volume of 700ml, driving the product’s unit price to increase.
In 2018, cocktail culture in Malaysia further popularised, boosting on-trade volume growth for rum and gin, which are highly sought after as cocktail bases. With local consumers’ growing knowledge of cocktails, bar and pub operators enhanced their unique selling points to spark consumer interest.
As the on-trade cocktail movement continues to develop, it is expected to penetrate second-tier cities like Penang, Johor, and Melaka over the forecast period, with more openings of cocktail-focused bars and pubs. Furthermore, with the marketing push through social media and digital journalism, gin and rum are expected to further popularise and attract interest from a wider consumer base, which includes young professionals and partygoers aside from the affluent working class and expatriates.
In 2018, Pernod Ricard continued to lead spirits category in Malaysia and saw a large increase in its total volume share. To engage consumers continually, the player introduced new flavour variants throughout the year across several categories including cognac, blended Scotch whiskies, and dark rum.
The spirits category is dominated by international players, which saw robust volume sales growth in 2018, whilst several local players were heavily impacted by the drop of sales in the “other” spirits category. The strong performance by international players can be accredited to their aggressive marketing initiatives and strategic expansion in distribution network.
Moving forward, international players are expected to maintain leading positions with their strong brand equities and overarching distribution networks compared to local players. Although with the growing cocktail culture in Malaysia, consumers are constantly demanding new and exciting variants, it is imperative for international players to tap into artisanal and premiumisation trends that are gaining popularity, such as The Botanist gin under Fortier Wine & Spirits’ portfolio.
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This industry report originates from Passport, our Alcoholic Drinks market research database.