Factors ranging from the return of travel retail to emerging consumer trends and revitalised interest in certain product categories will underpin the resurgence of the alcohol beverage industry in the Asia Pacific.
According to research and analysis by IWSR, specific bright spots in various markets in the region will account for the overall rebound of the industry by the end of 2021. The report states that even though total volume plunged by 8% in 2020, that number is set to gain 2% in 2021, signaling a recovery this year, and a projected return to pre-Covid levels by 2025.
The recovery is being galvanised by all alcohol categories except wine, which is set to see volume declines in the Asia Pacific region. The biggest contributor to overall volume growth are RTDs (ready-to-drink), a category where single-use drinks like packaged cocktails, hard seltzers and canned wines fall under.
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This observation makes sense considering how consumer behaviours are changing, with stay-home consumption (whether due to lockdowns or evolving habits) charting long-term growth even as drinking at bars and restaurants invariably slumps.
The growth pattern isn’t identical throughout the region, however. According to IWSR’s examination, countries like Japan, which accounts for about 20% of the global RTD market, already saw RTD volumes surge 12% in 2020 even as the nation’s overall volume saw a near 5% drop. Since most RTD transactions happen off-trade, the sales channels were already well insulated from lockdowns.
Meanwhile, China, the largest alcohol market in the world, suffered a painful 6% decline in total alcohol beverage volume in 2020, due to their reliance on on-trade sales. Yet, their massive consumer base and impressive e-commerce infrastructure will allow them to see strong growth of nearly 4% in 2021, bolstered by flavoured spirits, RTDs and single malt whiskies.
Australia, a mostly off-trade market, saw on-premise losses mitigated well by retail sales. This allowed them to already see a 3% growth in 2020, the most of any country in Asia Pacific that year. Spirits and RTDs saw the biggest volume gains, with beer consumption growing as well even as most other countries see declines in that category.
The Philippines will see volume recover by 7% in 2021, driven mostly by gin, which is notable since Philippines is already the world’s largest gin market. The recovery is next most attributable to wines and other spirits, even as beer consumption dips in the Southeast Asian nation.
As for Singapore, while total volumes saw close to a staggering 9% plunge in 2020, it is set to recover quickly to pre-Covid levels by 2022. The plummet was mostly due to a nose dive experienced in the beer category, which represents over 80% of all consumption in the market. The bright spot for Singapore was in wine, which saw a 12% climb thanks to the sector already being dominated by off-trade channels.
In India, the market is being kept afloat mostly by affluent buyers. The country saw one of the biggest alcohol beverage volume declines in 2020, down almost 30% in total. Yet, ultra premium and above Scotch and other foreign whiskies saw demand growth. The fact that e-commerce doesn’t play a strong role in India due to government restrictions, could also be a factor.
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As observed, not all sectors will see rebound and growth, with promising areas not uniformly experienced across all Asia Pacific countries as well, with some areas set to continue experiencing the gloom brought on by Covid-19.
“Though an unprecedented downturn, the decline in beverage alcohol in Asia Pacific was less than previously forecast, as several factors ultimately helped the industry last year,” states Sarah Campbell, research director for Asia Pacific at IWSR Drinks Market Analysis, in the report.
“The acceleration of e-commerce, growth of RTDs, strong at-home consumption in key markets, and the resilience of countries such as China and Australia, will underpin the region’s growth going forward.”
Head over to their website for the full IWSR report.