Preview of the Year - 2012 - Part I - Alcoholic Drinks
In this, just-drinks' first management briefing of 2012, Spiros Malandrakis, alcoholics drinks analyst at Euromonitor International, takes a look at what lies in store for the broader alcoholic drinks category, ahead of in-depth consideration for beer & cider, spirits and wine.
Living in Interesting Times, or Keep Calm and Carry On Drinking
Extreme financial volatility, mounting social tensions, rampant unemployment and a mounting sense of consumer unease have rattled the alcoholic drinks industry to its core in 2011.
2012 is already shaping up to offer more of the same, but bigger in scale, like a blockbuster movie’s second instalment that follows the same underlying formula, but with bigger explosions. Fundamental monetary and socio-economic issues have merely been papered over, swept under the rug or kicked down the road. Regional trade imbalances, severe and prolonged austerity drives, solvency and liquidity fears, inflationary pressures and the exchange rate roller-coaster will all retain their key roles in the unfolding drama.
At the same time, general consumption levels for alcoholic drinks should once again demonstrate the industry’s relative resilience – at the very least in terms of top line figures. Nevertheless, it is the undercurrents below the surface that will be of the most interest.
Two Brave New Worlds
Economising, thriftiness and value for money propositions have all gained significant traction in the wake of the Great Recession. As the West still appears to be largely entangled in the same macroeconomic web spun back in 2008, and which increasingly resembles a Gordian knot, market maturity concerns will only be further exacerbated, leaving little room for volume or value gains. Discounting strategies, private label offerings and special offers will capitalise on the uniform belt tightening at the same time that niche segments like craft beer and small batch spirits will continue swimming against the tide.
On the other hand, and provided cataclysmic events like sovereign debt defaults or the dissolution of the European Union are avoided (or at least postponed indefinitely), emerging markets will continue motoring on . Aspirational consumption, Westernisation and the status symbols of super-premium offerings have already found their home in the Far East and other emerging markets. 2012, however, will see such trends truly take root.
Simply put, bling will still be king in China. Much less so in Western Europe and North America.
From the alarmist headlines egging on the introduction of punitive alcoholic drinks legislation in Western European markets to the neo-prohibitionary rhetoric creeping in mainstream politics in the UK and the US to restrictive taxation barriers in Russia and India, the industry will continue finding itself in the cross-hairs of increasingly aggressive politics. Social responsibility initiatives and persistent lobbying activity will become increasingly more necessary to stem the legislative tide.
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