Market Trends of Asia-Pacific Spirits Industry
Increasing Expenditure on Alcoholic Beverages in the Region
The major driving factor for the growth of spirits and other forms of alcohol consumption in countries like China, Japan, Malaysia, and Singapore has been an increase in spending patterns and a rise in per capita consumption of alcohol due to higher income levels. The demand for spirits in the region is also driven by the high-classed millennials who wish to go out to social gatherings, leading to the consumption of their favorite liquors. The trend is even influenced by the concept of partying developed in the Western part of the world, as more Asian youth consumers want to get involved in drinking habits at an early age, which may boost the overall market. To data cited by IMF and World Bank, there has been a consistent rise in the overall expenditure made by Asian consumers on alcohol and tobacco products, which has been leading to the growth of the overall market. An estimate has been made that total expenditure is likely to reach around USD 425 billion by 2025.
There has been an influx in the growth of the spirits market in smaller countries, such as Thailand, Malaysia, Singapore, and Indonesia, as they have been adopting the culture of drinking across social gatherings. A lot of Southeast countries, being hotspots of tourist destinations, have been experiencing high demand for alcohol. Hence, the rise in consumer spending and changing lifestyle of millennials toward consuming alcohol have been driving the market for spirits in the Asia-Pacific region.
China Accounts for the Largest Market Share in the Region
Chinese consumers are more likely to connect drinking with personal occasions, relaxation, or indulging themselves. Studies found that China will surpass the other top countries in alcohol intake per capita by 2030. Chinese adults are projected to drink more than 10 liters annually on average and per capita consumption of alcohol, making it one of the largest markets for spirits during the forecast period. Owing to high economies of scale, players operating in the market are focusing on adopting strategic measures, such as partnerships, and expanding their presence in the country. In 2020, Roust Group partnered with Beijing Soko to launch the premium Russian spirit Russian Standard Vodka in China with an aim to boost sales.
Chinese consumers' awareness and understanding of imported spirits are rapidly becoming more sophisticated. High-end whiskey bars and premium quality gins are already found in China's largest cities. Traditionally, China is a brandy market. Even vodka, a spirit often compared to local baijiu, is registering strong growth. Under the spirits market, baijiu, the local spirit of China, is reported to witness the highest demand in China. According to the data on Taobao and Tmall, the e-commerce platforms run by Alibaba Group, baijiu sold most bottles in China compared to the other craft spirits, holding roughly 77% share of spirit sales from the past few years. International players in Chinese spirits accounted for a relatively small share. Thus, global spirits manufacturers are partnering with local Chinese distilleries to build stronger brand awareness among local consumers due to enormous growth opportunities for imports at the high end, particularly for whiskey, cognac, and premium baijiu.
