NEWS
IWSR: RESILIENCE IN CHINA AND USA HAS HELPED DRINK GIANTS MITIGATE COVID LOSSES
By Susan Lewis
11-5-2021
Credit: Adam Wilson/Unsplash
Resilience in the Chinese and USA drinks markets has helped world’s biggest drinks firms mitigate losses incurred by the pandemic, according to a report by IWSR market analysis.
The two markets put together account for a third of global alcohol volume and over 40% of global value in the 2020/21 period, according to IWSR data.
For the first nine months of its 2020/21 fiscal year, French drinks giant Pernod Ricard reported organic sales growth of 1.7 percent. In China, Pernod Ricard saw gains of 34 percent , while in USA the group registered mid-single-digit growth.
Meanwhile, French drinks giant Moët Hennessy announced a 36 percent uplift for wine and spirits in Q1 2021 compared to Q1 2020. When compared to Q1 2019 pre-pandemic performance, it represents an uplift of 17 percent.
Moët Hennessy highlighted a “strong rebound” in China and “robust demand” in the USA for the strong performance. In its QI results, Moët Hennessy reported a 22 percent increase in Champagne volumes, driven by the USA and Europe, and a 28 percent increase in Hennessy Cognac volumes, driven by China.
IWSR said China’s economy quickly bounced back from the crisis, experiencing a V-shaped recovery aided by increased demand from overseas markets for its manufactured goods.
The quick economic recovery was made possible by a rapid suppression of the virus which allowed everyday life in China to almost return to normal.
Tommy Keeling, research director at IWSR, notes that most Chinese consumers are “perfectly comfortable going out and don’t mind the extra contact-tracing.”
Not only are Chinese consumers more comfortable going out, but IWSR consumer research shows that they are also willing to spend more. The loss of international travel means Chinese consumers are enhancing their domestic spend, some of which has filtered into drinks. Many consumers are also looking to vacation within the country, which is contributing to a boost in travel retail sales for destinations such as Hainan Island.
The island province raised its duty-free allowances to RMB100,000 last year, further driving growth of travel retail. The destination is expected to become a key driver of global travel retail growth for high-end international brands, with a number of travel retailers and suppliers pouring investment into the island.
“Hainan is expected to represent 18 percent of total global duty-free business before 2024, with China representing 30 percent on a similar time frame,” a Beam Suntory spokesperson told IWSR.
In the USA, around 80 percent of the market’s drinks consumption takes place in the off-trade including e-commerce channels.
IWSR data shows that USA wine and spirits e-commerce sales skyrocketed 80 percent in 2020, while that in China grew by around 20 percent.
China is the world’s largest alcohol e-commerce market, but it is set to be overtaken by the USA by the end of 2021.
Brandy Rand, IWSR’s COO of the Americas, also observes, “the dinner table experience at home was heightened during the pandemic, which led to people wanting to spend more or invest more time in making those moments and occasions special.”
(the writer can be contacted at: info@thewinechronicle.com)
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