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Spirits Category Performs Well Despite Volatility Of The Rand

Spirits Category Performs Well Despite Volatility Of The Rand

A report recently released by BMi Research stated that the Rand exchange rate against other foreign currencies was volatile throughout 2018 impacting the level of imports and exports.

Surprisingly the spirits category did well amidst all the negative economic factors. White spirits were the major driver of growth for the category. The likes of gin and vodka were the main drivers for the growth experienced in the white spirits category, following the global trend.

Off/On Consumption

Similar to other alcoholic beverage categories, the off-consumption channel performed better than the on-consumption channel for the spirits category as well. Promotional activity of spirits products in retail stores and wholesale channels (the off-consumption channel) may have driven the increased volume demand.

In as much as the spirits category is believed to be perceived as a premium product, the consumer may still be looking for products, that are cheaper, to make their money to stretch a little more in tough economic times.

Region

Gauteng remained the mainstay region for the spirits category. The region has a large population base that naturally drives demand for alcoholic beverages, spirits included. Gauteng is also the economic hub of the country with residents who have a higher level of disposable income and can afford to buy premium products such as spirits.

The second largest region in terms of volume for the spirits category is the Western Cape, followed by KwaZulu-Natal.

Brown Spirits

The brown spirits continued to dominate the spirits category. This subcategory is well established and has a large consumer base. However, over the years, the brown spirits sub-category has been losing share to the white spirits category. White spirits are gaining popularity amongst the younger generation, and bartenders and mixologists
are inventing new drinks using white spirits which cater for this consumer base.

Selling Price
The industry selling price increased positively from the recorded price in 2016. The increase in price was lower than the headline inflation rate for the base year.

A substantial number of brands in spirits category are imported and thus producers were not affected by the increasing local production costs.

Article by Bloomberg.

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