WINES & SPIRITS: DATA & ANALYSIS


IWSR: Expect promotion-led activity and preference for ‘tried and trusted’ brands


Based on the evolution of the global coronavirus pandemic to date, Thorsten Hartmann, Director of Custom Analytics at IWSR Drinks Market Analysis and his colleagues forecast a reduction in wines & spirits volume consumption of -65 to -75% year-on-year. However, China could prove to be a bright spot for international spirits brands as early as 2021, as Charlotte Turner discovers.


Cognac not far behind, but the small vodka and gin markets are doing well too. “Sparkling wines are also expected


to do well, but the still wine recovery is expected to be slower. This all needs to be seen in the context of the giant baijiu category which – after a brief recovery bounce – will continue its long-term decline, if subject to some integral premiumisation.”


Above: Whisk(e)y is likely to recover quicker than other spirits in travel retail.


D


uring the TRMarketplace 1nSpirit webinar hosted by IWSR and m1nd-set in


October, IWSR disclosed that it anticipates a full recovery of the travel retail wines & spirits market (back to pre-crisis levels) by 2024. TRBusiness asked one of the webinar’s presenters, Thorsten Hartmann, Director of Custom Analytics at IWSR Drinks Market Analysis, if this was at least partly informed by the forecasts on passenger traffic from Airports Council International (ACI). “Airport


traffic projections are one factor, but we are also


“2020 will see a negative impact on most beverage alcohol categories domestically in China, but with a few bright spots – among them malt Scotch and US whiskey, for example – and better than originally projected.”


Thorsten Hartmann,


Director of Custom Analytics, IWSR Drinks Market Analysis


26 TRBUSINESS


bearing in mind other travel retail channels such as borders and the ferry and cruise business,” says Hartmann in an exclusive interview with TRBusiness. “Importantly we also bear in mind


internal projections by key beverage alcohol brand owners, so the forecasts represent broad industry consensus based on information currently available.” While China was the first to bear


the colossal brunt of the pandemic, in some parts, the country appears to be well on the road to recovery, especially if Alibaba’s most recent sales results are anything to go by. TRBusiness asked Hartmann if wines & spirits producers and retailers in China are benefitting from this positive momentum, domestically at least. “Twenty twenty will see a negative


impact on most beverage alcohol categories domestically in China, but with a few bright spots – among them malt Scotch and US whiskey for example – and better than originally projected,” clarifies Hartmann. “We do expect to see international


spirits bounce back quickly in 2021 [in China] – whiskies leading the charge,


Brands streamlining skus As has been well-reported by TRBusiness, as of 1 July this year liquor was added to the set of new categories now available to purchase in offshore duty free shops on Hainan island. This accompanied the tripling of the allowance to RMB10,000/$14,060. Both have surely had a positive impact, TRBusiness asks. “Early reports seem to agree it will


be a positive factor,” says Hartmann. “We will be watching for impact


not only on China, but also on neighbouring markets. But we must also remember that there is clearly pent-up demand among Chinese leisure travellers. Once international borders start to reopen, tourist RMB will once again be spent elsewhere.” During the global pandemic, no


brand – large or small – in travel retail has been able to offset the impacts of historically low international passenger traffic. During the many discussions with members of the travel retail community this year, TRBusiness knows that many of the larger drinks groups are streamlining their portfolios by cutting skus in the travel retail channel specifically. TRBusiness anticipates that we could see the exit of some local or independent brands altogether at this time. Hartmann offers his perspective:


DECEMBER 2020


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