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Recession Boosts Domestic/local Spirits at Expense of International Brands

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Recession Boosts Domestic/local Spirits at Expense of International Brands

Recession Boosts Domestic/local Spirits at Expense of International Brands
August 09
09:59 2010

2009 was not a good year for multinational spirits companies. Euromonitor International’s ‘2010 Millionaires’ ranking saw total volumes of international brands on the list fall by 5% while domestic/local brands saw growth of 6%, selling over 400 million 9-litre cases. The Millionaires supplement is a ranking of spirits with sales of over one million 9-litre cases across all retail channels. Now in its third year, the 2010 list includes a record breaking 162 brands.

The 2010 listing continues to gain new breadth and depth with 17 new brand entries, including brands from Colombia, Turkey and most notably the soju producers of South Korea. It also shows the strength and power of spirits consumption in Asia-Pacific as domestic/local brands on the list, which are almost entirely sold in the region, accounted for over 40% of total brand volumes.

Suffering International Brands

As predicted in last year’s supplement, international brands performed poorly in 2009. Due to the effects of the recession, consumers’ trading down and the decline of on-trade consumption, total volume sales of international brands on the list has fallen. Pernod Ricard remains the company with the most brands on the Millionaires list despite losing two from the 2009 list – Presidente brandy and, more surprisingly, Luksusowa vodka.

However, two of its stand-out brands were Indian whiskies which continued to benefit from a rapidly growing category and a booming Indian economy. Second-placed United Spirits increased the number of brands on the list up two to 19 with its Bagpiper Indian whisky becoming the leading whisky brand in the world.

Diageo sits in an increasingly distant third place with 14 brands (down one) with only two of its rum brands benefiting from strong growth in its core markets (North America for Captain Morgan, Venezuela for Cacique) along with Bells in the UK. Bacardi continued to suffer from its over-reliance on a limited number of major markets, specifically in the US and Spain, with only two of its brands, Eristoff vodka and William Lawson blended scotch, recording growth.

A More Positive Future

While the picture painted in volume terms in 2009 was relatively bleak for international brands, 2010 is likely to be far more positive, due to the emerging markets of Latin America, Asia-Pacific and Eastern Europe. “Signs of economic recovery in the first half of 2010 will undoubtedly help international brands bounce back,” says Euromonitor International senior alcoholic drinks analyst, Jeremy Cunnington. “However, many core markets for these brands, especially in Western Europe, could still hold back growth as governments and consumers continue to restrict spending to reduce their high levels of debt.”

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