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Thursday, May 23, 2024

Singapore alcohol market to recover in 2021

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The alcohol sector in Singapore is expected to bounce back from the pandemic this year, with consumption predicted to grow by 4.8%.

A new report from data and research firm Fitch Solutions said alcohol consumption in Singapore last year dropped 9.3% due to Covid-19 restrictions on the bar industry.

Between 2021 and 2025, Fitch Solutions expects alcohol consumption in the market to increase by an average annual growth rate of 2.6%.

This would mean alcoholic drinks consumption would rise from 142.6 million litres this year to 156.6m litres by 2025.

By category, beer represents the largest proportion of alcohol consumed in 2021 at 87.6%, and for this to remain consistent until 2025. It is followed by wine at an average of 9.8% between 2021 and 2025. Spirits accounts for 3% over the four-year period.

Fitch Solutions expects spirits to become a consumption growth outperformer over the four-year period, but from a low base. The category is expected to expand by an average of 4.1% annually.

The report also noted that Singapore has a ‘favourable’ demographics profile for the alcohol sector with adults of legal drinking age (18 and over) representing 83.2% of the total population in 2020. This forecast will continually increase to 85.9% by 2050, the report noted.

Furthermore, disposable income in Singapore is also one of the highest in Southeast Asia, with middle and upper-class households accounting for 95% of all homes in 2021. This is expected to rise to 97% over the next four years.

Fitch Solutions also identified opportunities for premiumisation in the market as producers unveil locally-made beer, gin and whisky with Asian or Singaporean flavours, which appeal strongly to younger drinkers (20-39 age group).

However, the report said this young adult population is predicted to fall from 29.6% in 2021 to 23.9% by 2030.

This poses a threat to craft producers, Fitch Solutions said, as younger consumers are more willing to explore new trends and flavours.

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