Monday, April 6, 2009

China - Alcoholic Beverage Consumption

I have recently performed a bit of business advisory work in the alcoholic beverage sector. One of my recommendations focused on the emerging markets for this USA based company. One of the reports I read provided very good insights on the decline in the Western markets versus the growth in Asia-Pacific, and in specific China. The report here highlights that:

"The global market for alcoholic drinks was worth US$979bn in 2007, equivalent to 1,460bn servings. Although sales of alcoholic drinks are typically relatively immune from recessions, although the current economic downturn has coincided with a period of higher inflation and rising prices which have dampened demand for alcoholic drinks. However, the downturn itself is likely to have a positive effect on demand. In developed markets consumers will spend more time socializing and drinking at home. In emerging markets consumers will buy fewer consumer durables and spend part of the savings on everyday treats such as beer, wine and spirits."

A few of the key findings of the report are:

"The volume of alcoholic drinks consumed in western Europe is forecast to decline over the period 2007-2012 by an average of 0.2% per annum. Between 2007 and 2012 the annual sales of spirits globally is forecast to increase by over 1bn liters. 70% of this increase will take place in Asia-Pacific markets. China is the largest beer market in the world, having overtaken the US in recent years. This growth is being driven by a growing middle class that has increasingly Western tastes plus a shift away from traditional spirits consumption. Globally, there will be an additional 18.7bn liters of beer/cider/FABs sold in 2012 compared to 2007. 62% of this increase will take place in Asia-Pacific and 29% will be in Eastern Europe. Less than 8% of this growth will be in North America and these regional rises will be a result of the decline in the Western European market."

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