Singapore’s wine market will grow to reach US$1.4 billion by 2021, driven by consumption of premium still wine, despite the country’s punitive ‘sin’ taxes on alcohol, according to the data and research company GlobalData.
The country’s still wine category is forecast to grow at a compound annual growth rate (CAGR) of 5.2% between 2016 and 2021, while sparkling wine will also see a CAGR growth of 5.1% during the period, based on GlobalData’s forecasts.
The growth is a result of the country’s growing economy, individual’s high disposable incomes and a growing affinity towards premium wine products imported from countries such as Australia, France and Chile, according to the company.
“As the Singaporean economy continues to grow and consumer spending increases, consumers are likely to trade up to more premium offerings rather than mainstream or value wine products,” explains Ronan Stafford, Lead Consumer Analyst at the data company.
“Premiumisation opportunities are present across all wine categories, especially within the still and sparkling wine categories, given their strong growth rates.”
The fortified wine category, however, is likely to experience a slower CAGR rate of 3.2%, and for the next few years until 2021.
“Consumers within this category are less likely to trade-up to premium offerings, so manufacturers charging premium prices will need to thoroughly justify it to the consumer,” said Stafford.
Singapore, a country with a large Muslim population, levies ‘sin taxes’ on alcohol products, which will somewhat limit the growth of its wine market.
“The low private label presence highlights the premium wine preferences of local consumers in Singapore,” he added. “The fixed ‘sin’ tax on alcohol is also likely to affect the demand for cheaper private label wines, as consumers are likely to give preference to higher quality wines which better justify their higher price points.”
“Therefore, premiumization opportunities are rife within the market, given that producers need not worry about a significant presence of low-price private label products.”