India Food & Drink Report | Q3 2018bmiresearch.com27
Premiumisation Key In Alcoholic Drinks SegmentAustralia - Alcoholic Drinks Spending And Consumption, % y-o-ye/f = BMI estimate/ forecast. Source: BMI/National StatisticsWe note that Australia overtaking China to move into third position is not because of any sort of decrease in China's score in thisquarter's Asia Alcoholic Drinks RRI. In fact, China's score has improved in Q318, coming in at 65.1, up from 64.3 in Q218. Australiaovertaking China is the result of a more balanced risk and rewards score, with Australia scoring higher in both country and industryscores.China's higher score quarter-on-quarter is the result of an improved industry rewards score. For example, feeding into this rewardspicture is the fact that we project alcoholic drinks spending to rise by 13.7% y-o-y in 2018, up from 10.9% y-o-y in 2017.China's alcohol market is transforming rapidly, with rising incomes leading to increasingly more sophisticated alcohol demands, withconsumers trading up from mass-market offerings to premium and high-quality choices. Premiumisation in China's alcoholic drinkssegment has resulted in growing demand for wine, which is perceived to be more luxurious and premium. In particular, Europeanwines are in high demand from Chinese consumers (see'European Wines A Hit With Chinese Consumers', September 19 2017),while champagne is another segment that will see growing demand (see'China Luxury Focus: Wine and Champagne Winning OverConsumers', November 2 2017).India A Sleeping GiantIndia has gradually climbed up our Alcoholic Drinks RRI rankings, moving from ninth position in Q118 to eighth position in Q218and coming in seventh position in Q318. We also note that India's Q318 RRI score has improved quarter-on-quarter to 61.3, up from60.6 in Q218, and climbed significantly in global rankings from 29th position in Q218 to 24th position in Q318. This improved scoreand rise in global rankings is due to an improved industry rewards score, as we forecast an uptick in alcohol consumption in India ascultural attitudes change, particularly among young and urban consumers. We forecast alcohol consumption in India to grow by anaverage of 4.4% annually between 2018 and 2022, up from 3.1% between 2013 and 2017. India also stands out in Asia for havinghigh country rewards, owing to its large population, which is second only to China, with its total population forecast to reach 1.4bn in2018. The country is also home to a large young adult population, which tends to spend on and consume higher levels of alcohol.The number of young adults (20-39 years old) in India will reach 443.5mn in 2018, compared to 418.8mn in China for the sameyear.India Food & Drink Report | Q3 2018bmiresearch.com28
Considerable Rewards But Dragged Down By RisksIndia & Asia Alcoholic Drink Rewards & Risks ScoresNote: Scores out of 100; higher score = more attractive market. Source: BMIWhile India presents considerable opportunities for drinks companies and for global beer companies in particular, we note that Indiais a high-risk, high-reward market for alcoholic drink producers. We highlight that India's overall RRI score is dragged down by a low
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- Summer '18
- Sagar Arora
- ........., Alcoholic beverage, Food processing