Sector Trend Analysis – Wine, beer and spirits in Singapore

Overview

Alcoholic drinks in Singapore are experiencing increasing premiumisation driven by sustainability and health-conscious trends as consumers shift their focus to higher quality, more expensive drinks over standard options. This, combined with higher transport costs due to pandemic-related supply chain issues has meant higher prices for alcoholic drinks.

Singaporeans are putting greater focus on drinks with low sugar and calories and innovative flavours that are sustainably produced, especially millennials and older Genration Z consumers. The combination of greater health consciousness seeking new experiences is supporting demand for craft beverages such as craft spirits, which are often used to prepare cocktails, as well as craft beer, especially non/low alcohol with refreshing flavours.

Since the pandemic, consumers have prefered visiting large one-stop stores, such as super and hyper markets, where they can purchase all grocery needs including alcoholic drinks. Moreover, some alcoholic drinks such as beer, are usually sold in multipacks in supermarkets and hypermarkets at more affordable prices compared to convenience stores and forecourt retailers.

Retailers also witnessed significant growth via e-commerce, which is expected to offer further expansion potential for alcoholic drinks as consumers are increasingly confident placing online orders, appreciate convenient home delivery, the wider range of products on offer and competitive prices.

Wine in Singapore

Overall wine sales increased at a CAGR of 5.9% from 2018 to 2022 to reach 15.5 million litres. Sake was the most dynamic category growing at a CAGR of 25.4%, followed by sparkling wine. Over 2023-26, wine is projected to increase by 3.1% annually in 2026 to reach 18.0 million litres.

Despite rising pandemic related logistical, fuel, and shipping costs, demand for wine continues to rise in Singapore. Before the pandemic, Singapore was considered one of the most dynamic emerging markets for traditional wine producers from Europe with France dominating premium wine sales. Other wine origins have been gaining momentum, such as Australian wine. Due to surging popularity of Japanese food and drink in Singapore prior to the pandemic, sake sales also continue to increase.

Singapore consumers are also increasingly demanding more refreshing alcoholic drinks. A wider choice of sparkling wine, including prosecco and cava, is changing consumers' perceptions, with a general move away from being exclusive to celebrations towards being suitable for pairing with food. For example, champagne is now considered suitable for pairing with simple cuisine such as fried chicken, enabling the category to expand to a wider range of consumption occasions. Hence, sparkling wine is particularly gaining in popularity among millennials. Alternative packaging trends for sparkling wine such as cans and single serve bottles, will likely attract younger consumers of a legal drinking age searching for convenience. These packaging types are more practical for out-of-home consumption during the summer, as they can be easily used in outdoor spaces and at events compared to standard glass bottle sizes.

Beer in Singapore

Beer sales were static at a CAGR of 0.7% from 2018 to 2022 but are projected to increase by a CAGR of 3.0% CAGR to reach 145.0 million litres in 2026. Consumers' increasing interest in health since the pandemic has driven a shift in consumer preferences towards non-alcoholic beer, which only launched in Singapore in 2019, as well as craft beer. Non-alcoholic beer is considered an alternative for mid-day drinking as concerns over weight gain linked to overconsumption of alcohol, especially during home seclusion, has been a growth driver. As well, craft and artisanal alcoholic drinks is experiencing rising interest from younger generations with potential to further expand due to the increasing offer of local or unique flavoured craft beer.

According to Euromonitor, leading beer player Asia Pacific Breweries launched Edelweiss in 2021 to satisfy consumer demand for new experiences and flavours. It only uses natural ingredients and a unique blend of mountain herbs in an attempt to address the increasing popularity of niche wheat beer among consumers who want to experience an authentic quality beer.

Moreover, local craft beer producers have launched local or unique flavours that draw inspiration from Asian ingredients and culture, and are marketed as an accompaniment to Asian food. For example, King's Garden Ale, which was relaunched by the brewery in 2021, was the first tea beer brewed to pair with local pork rib dish Bak Kut Teh, while its well-known Tiramisu Stout, designed as a dessert but in the form of beer, targets consumption after a meal. Furthermore, Singapore's borders are being lifted in 2022, allowing in-bound tourists to try unique local craft beer from Singapore. Therefore, together with its recovery through on-trade as restrictions are now relaxed, craft beer is expected to continue growing.

Spirits in Singapore

Sales of spirits surged by a CAGR of 20.5% over 2018 to 2020 to reach 6.4 thousand litres with gin, whiskies, and rum driving sales growth. All categories saw double digit sales growth over 2018 to 2022 except for liqueurs, tequila, and single grain Scotch whisky. Sales growth over 2023 to 2026 is expected to be 4.7% annually for all spirits.

Despite shifting to at home consumption during the pandemic, many types of spirits, including whiskies, recorded double-digit off-trade growth over 2018 to 2022, excluding brandy and cognac, and tequila (and mezcal). In particular, brandy and cognac is generally associated with older generations, making it difficult for producers to capture older Generation Z consumers and millennials.

Demand for gin in Singapore has continued to rise. Both gin and vodka sales are traditionally dominated by the on-trade channel, but gin benefited more from the shift to home consumption due to perceptions of being a more refreshing alternative to vodka, whilst gaining in popularity in line with the mixology trend in Singapore as consumers attempted to prepare various cocktails themselves. Often, only small quantities of gin are needed to produce an appetising drink, making gin based cocktails more affordable and having fewer calories.

This is contrast to a more flat performance for vodka, which recorded single-digit total volume growth in 202x. Gin's versatility in terms of consumption occasions and pairing with various cuisines is another attractive feature. This is encouraging players to launch new and interesting flavours of gin, particularly targeting more adventurous younger generations.

Whiskies continued to be led by major players Pernod Ricard (S) Pte Ltd and Moët Hennessy Diageo Singapore Pte Ltd., offering popular single malt Scotch whisky brands such as The Glenlivet 12 YO, and The Singleton of Glen Ord 12 YO, respectively. In addition, Pernod Ricard retained its dominance of the dynamic Irish whiskey with Jameson, continuing to gain marginal total volume share from smaller players under "others". This is despite the fact that local consumers are searching for new experiences, which could in the future create opportunities for niche brands to enter, while more affordable prices might also be a positive growth driver for smaller players.

In addition, increasing numbers of spirits brands are expanding their off-trade networks to include modern grocery retailers such as supermarkets, and third party e-commerce platforms including Shopee. A large number of offerings from parallel imports has also been a significant factor in this expansion.

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Resources

• Euromonitor International:
  • Alcoholic Drinks in Singapore, July 2022
  • Beer in Singapore, July 2022
  • Spirits in Singapore, July 2022
  • Wine in Singapore, July 2022
• Global Trade Tracker, 2023

Sector Trend Analysis – Wine, beer and spirits in Singapore
Global Analysis Report

Prepared by: Kris Clipsham, Market Analyst

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