The Australian alcoholic beverages consumption market is expected to reach US$ 32.44 billion by 2025, owing to the rise in the consumption of wine, premiumisation trend and innovative marketing strategies. However, factors such as consumer awareness, risk for several diseases, changing social attitudes and alcohol taxation could affect the industry negatively.
- Definition / Scope
- Market Overview
- Market Risks
- Top Market Opportunities
- Market Drivers
- Market Restraints
- Industry Challenges
- Technology Trends
- Pricing Trends
- Regulatory Trends
- Other Key Market Trends
- Market Size and Forecast
- Market Outlook
- Technology Roadmap
- Distribution Chain Analysis
- Competitive Landscape
- Competitive Factors
- Key Market Players
- Strategic Conclusion
Definition / Scope
Any drink that contains ethanol/ ethyl alcohol is an alcoholic drink or beverage . The Alcoholic Drinks market includes all alcoholic beverages that are produced by fermentation or distillation.
The process of making alcoholic beverages involves allowing the sugars in grains, fruits, honey, and others to undergo fermentation or decomposition. Also, some other alcoholic beverages are made from rice, apples, cassava, and many other sugar sources, and this also includes the milk of horses.
Alcoholic beverages are generally divided into three broad categories, but further variations in recipes are seen. These three broad categories are briefly described below:
The first category is beer. It is usually made with barley that is sprouted and roasted into malt, cooked with water, fermented with yeast, and flavored with the flowers of the hops plant. Sometimes other grains can also be used or added to make beer. Beers range in alcoholic content from about 2 percent to about 8 percent .
Wine is the next category. Wines are made from grapes and sometimes other fruits that are juiced and fermented. The alcohol content in the natural or unfortified, grape wines generally ranges from 8 to 14 percent.
The third category includes distilled spirits. They are made from grain, fruit, or other sugar sources that are fermented and then distilled. The concentration of alcohol happens in a heating and cooling process. The concentrated liquid is thus called a distilled beverage and includes such liquors as whiskey, gin, vodka, rum, brandy, and liqueurs, or cordials. The range of alcohol content is usually 40 to 50 percent
The consumption of alcohol is widespread within Australia and entwined with many social and cultural activities. However, harmful levels of consumption are a major health issue, associated with increased risk of chronic disease, injury and premature death .
The market size of Alcoholic beverages consumption market in Australia amounts to US $ 26.489 billion in 2018. The market is expected to grow annually by 4.0% (CAGR 2018-2021). There were 185.8 million litres of pure alcohol available for consumption from alcoholic beverages in Australia in 2016-17. This was a decrease from the amount available for consumption in 2015-16 (188.2 million litres).
Australians downed 3.4% less pure alcohol from beer, or 2.6m litres, in 2016-17, compared with the year before. But the beer was still the drink most favoured by Australians, the beverage accounting for 39.2% of all alcohol consumed in the year. The wine was a close second, accounting for 38.3% of pure alcohol, followed by spirits (13.1%), ready-to-drink beverages (6%) and cider (3.4%)
Moreover, More than 90.0% travellers and 74.0% of the Australian population prefer to dine out, look out for the craft breweries and craft beer in the menu. According to Goldstein Research., 99% of beer consumers are happy with craft beers from independent brewery and 85% buyers are happy with gypsy brewer, who doesn’t own a brewery.
Alcoholic drinks in Australia continued to feel the impact of growing health consciousness. As a result, per capita, volume consumption of alcohol has largely been in decline since 2008. In addition, research from the Foundation for Alcohol Research and Education (FARE) found that only 77% of Australian adults consumed alcohol in 2017.
With 23% of Australians choosing to abstain from drinking and younger cohorts continuing to drink less than previous generations, as shown in the Government’s National Drug Strategy Household Survey 2016, this is a trend that is expected to persist.
There are some risks associated with the alcohol market. Some of them are discussed below.
The first and most important risk would be restrictions on alcohol marketing and promotion. They act as strong threat to the market . Also, there is a significant percentage of Australians among whom alcoholic beverages are not popular at all. In fact, 23 % of Australians do not drink alcohol at all .
From 1961–62 to 2016–17, the proportion of apparent consumption of different alcoholic beverages have changed substantially with decreases in the consumption of beer (from 75% to 39%) .
The third risk would be global competition. When compared globally, most revenue is generated in China (US$285,901m in 2018). In fact, China may emerge as a rival in long-term
Top Market Opportunities
There are several opportunities for alcohol industry to flourish in Australia. Some of those opportunities are the Australian culture, attractive advertising, and increase in consumption of wine by associating it with health benefits.
Firstly, drinking alcohol is often regarded as a strong part of Australian culture, and within advertising it is variously celebrated as fun, glamorous, and central to sporting or social success . In fact. approximately 41% of the population (aged 14 years and over) drink alcohol at least once per week, including 6% of the population who drink daily .
Also, increases in the consumption of wine (from 12.4% to 38%).is seen between 1961–62 to 2016–17. There is a growing popularity in the opinion that wine before bed ‘can help weight loss’: As per the poll conducted in 2017, almost 44% of Australians admitted to drink to get drunk and this is a higher number as compared to previous years. This can also be taken as a good market opportunity.
There are several growth drivers in the alcoholic beverage sector in Australia; some of them are
- Premumization and innovation: Manufacturers are trying out new ways to make their product appealing to their customers in the wine and beer market. This has been leading to the growth for alcoholic drinks market in Australia. This can be attributed to the rise in the customer preferences and demand for high quality and premium brands enriched with new and authentic flavours.
- Effective marketing strategies: Huge numbers of brewers are emerging in a highly competitive market in the country and are adopting various marketing strategies to sustain and compete with foreign brands such as Fosters in the market.
- Sales through off-trade distribution channels: The sale of alcoholic drinks through off-trade distribution channels such as supermarkets & hypermarkets is projected to perform certainly well over the forecast period.
- Advertisement of alcohol: In Australia, there is a good prominence of advertisement in conventional media such as television, radio, and print, outdoor billboards. In fact, the majority of expenditure is made on television and outdoor advertising. This sort of good advertisement opportunity can be a good market driver as compared to those countries in which such advertisement in banned.
- Social media strategies: Likewise, broader marketing techniques such as through sponsorships and digital as well as social media strategies also have seen a noteworthy investment in the last decade. These techniques enable alcohol advertisers to engage and interact with consumers in newer ways and are feasible with broadcast marketing tools.
- Job opportunities: More than 404,000 Australians are employed and more than $19.7 billion is contributed every year by the alcohol industry into the Australian economy, including a massive $5.9 billion in tax revenue. This employment opportunity includes all important entry level opportunities in every country town, every city suburb and almost everywhere in between. Millions of Australians have their first job experience in the alcohol industry and more than half of all Australian workers have worked in the hospitality industry at some stage of their career.
Some factors that are restraining the alcohol market are:
- Awareness about hazards of alchohol consumption: The Australian Communications and Media Authority (ACMA) Children’s Television Standards has enforced the regulation which would market alcohol as a ‘harmful content’.
- Risk factor for several diseases: The health hazards due to alcohol results in a range of chronic disease risk factors such as high blood pressure, obesity and overweight. It may also contribute to the development of major chronic disease such as cardiovascular disease, type 2diabetes, cancer, and chronic kidney disease
The various challenges are enlisted below.
- Changing social attitudes: According to the alcohol industry reports health consciousness, an indicator of consumer awareness and attitudes towards lifestyle choices, influences alcohol consumption trends. Health consciousness is expected to increase over the coming years and is interpreted by industry analysts as a trend that would heavily affect the alcohol industry. This long-term trend of declining per capita consumption of alcohol has been acknowledged as a threat to alcohol industry revenue .
- The role of alcohol taxation: Taxation can efficiently control the price of alcohol. Consequently, alcohol taxation provides a valuable force to influence alcohol pricing and it thus encourages responsible consumption of alcohol and minimises alcohol consumption to some extent
New technology impacts commerce across all marketplaces; the alcohol market is no exception. Local breweries exclusively supplied beer to consumers until refrigeration allowed for new national brands to ship their products across the country.
The internet and smart phone application technology provide businesses with the opportunity to market and advertise themselves in innovative ways. Nearly every good and service can be purchased online and delivered expediently. On-demand services afford consumers near-instant gratification.
Social media strategies that include broader marketing techniques such as through sponsorships and digital as well as social media strategies have seen a noteworthy investment in the last decade. Such techniques enable alcohol advertisers to engage and interact with consumers in newer ways and are viable with broadcast marketing tools
The government of Australia has proposed to increase alcohol price and the plan would prevent the price to go below the set price, which is already higher than it used to be.
This would hike the price of Australia’s most popular drinks, including a budget bottle of sparkling wine costing $10, up from $7cask of wine increasing from about $10 to $45 and a slab of beer rising from about $47 to over $50 .
A beer in Australia now costs $7.87 on average. Sydney took out the 27th spot, with the average price of $7.87. Meanwhile, over in Dubai, which came in first place, it is set at a staggering $15.10 which is almost double what Sydney residents are required to pay.
The average cost of beer ranges between $8 and $9 in our two biggest cities Sydney and Melbourne, while a bottle of wine costs $20 on average in Sydney and standard cocktails in between $17-18 in both
Some effective regulatory trends in the alcohol market include National Alcohol Strategy, establishment of legal purchasing age, and container deposit scheme. The Ministerial Drug and Alcohol Forum drafted the National Alcohol Strategy after three years of consultation.
The forum aims to finalize the strategy by March next year, and would supposedly be up to state authorities in terms of its recommendations on board. The strategy is expected to come up with the pricing proposal.
In addition, the strategy would also suggest a new taxation scheme that would see drinks taxed as per the alcohol content, rather than the category they fall under as opposed to the current situation where tax rates differ between wine, beer and spirits with wine drinkers paying the lowest tax.
The plan has also recommended considerable restriction on alcohol advertising. It bans the promotion of low-priced or, discounted alcohol, including “bulk-buys, two-for-one offers, shop-a-dockets and other promotions based on price”.
The state and territory liquor licensing legislation issues the principal regulatory mechanism for controlling the supply of alcohol in Australia. It establishes a minimum legal purchasing age for alcohol as well as determines the where, when and how alcohol might be sold.
Likewise, over the past decade, five State and Territory Governments (NSW, QLD, TAS, NT, and VIC), have also passed ‘secondary supply’ legislation supporting the parents to restrict the supply of alcohol to their adolescent children. Also, container deposit scheme comes into effect in New South Wales.
While already in place in southern Australia and northern territory, the container deposit scheme (CDS) was implemented in Australia’s most populous state, New South Wales, on 1 December 2017 by the government. The cost of administering the scheme and the refund are passed on to consumers
Other Key Market Trends
Premiumisation will remain a defining trend in alcoholic drinks in Australia over the forecast period. Due to this, alcoholic drinks will see considerably higher total value than volume growth. Australians will drink less but drink better quality alcohol.
Japanese whisky is set to record the fastest total volume growth in alcoholic drinks over the forecast period, a reflection of both its scarcity and the growth of premiumisation. Manufacturers will seek to promote the premiumisation trend through continuous new product development.
The craft trend will also remain a significant driver of the premiumisation trend. Industry sources noted that if the government provided greater tax relief for craft distillers this would affect their growth, as greater government investment would facilitate higher growth for local distillers.
The enduring influence of the craft trend will be seen in the strong growth predicted for English gin over the forecast period, while, within beer, this will translate into strong value growth in ale. Overall, the impact of premiumisation will continue to affect all alcoholic drinks, including cider, wine and RTDs/high-strength premixes
Market Size and Forecast
Revenue in the Alcoholic Drinks market amounts to US $ 26.489 billion in 2018. The market is expected to grow annually by 4.0% (CAGR 2018-2021). The Australian alcoholic drinks market is expected to reach US $32.44 billion by 2025, owing to the rise in the consumption of wine and the premiumisation trend in the country.
With the rise in consumption of alcoholic drinks and premiumization effect in Australia, the market for alcoholic drinks is estimated to record a strong growth. The demand for alcoholic drinks such as beer, wine and other drinks is expected to grow significantly over the forecast period.
The market’s largest segment is the segment Beer with a market volume of US $11.621 billion in 2018. In global comparison, most revenue is generated in China (US$ 285,901 billion in 2018). In relation to total population figures, per person revenues of US$ 1,070.44 are generated in 2018 .
The Australia alcoholic drinks market is expanding owing to the rise in the living standards of the common public and the expansion of retail stores offering alcoholic drinks is expected to drive the growth of alcoholic drinks market in Australia significantly over the forecast period.
The beer segment occupied the largest market share in the alcoholic drinks market in Australia, owing to the presence of huge number of craft beer drinkers in the country.
The beer industry accounts for around 1% of the total Australia’s GDP. Around 95% of the beer produced is consumed by the consumers. The wine industry in Australia occupies the second largest share in the alcoholic drinks industry owing to the rise in the premiumisation trend which is expected to drive the growth of the wine segment over the forecast period
The consumer awareness on health benefits of wine has led to consumers switch to wine segment. This has been aided by shift in consumer preferences and drinking habits has led to consumers to switch to healthier options, such as low calories and low alcoholic drinks. This shift from alcohol to wine is anticipated to propel the market for wine segment in the country over the forecast period.
The social class difference like between upper middle class, middle class, and rural population consumption patterns are driving the demand for packaging solutions. The demand for packaging solutions for different alcoholic drinks like wine, whiskey, beer, and vodka will continue to witness growth in the near future
Technological input has certainly had a profound effect on the alcohol industry. Screw-cap closure is derailing cork’s indisputable dominance. Likewise, bag-in-box packaging formats is revolutionising the traditionalist notions lashing occasions and positioning, In addition, advancements in de-alcoholisation processes is fundamentally altering adv content.
Experimental approaches to personalisation, convenience, crowdfunded ideas and reviews and evolving drinking patterns explored through the prisms and cameras of ubiquitous smartphones and online communities are finally reaching escape velocity and this wave of technology has the potential of having the most intoxicating effects for the industry in decades .
Distribution Chain Analysis
The scenario at drinks retailing is transforming; while store-based channels have historically dominated alcoholic, E-commerce is witnessing highly dynamic growth and starting to transform the arena. This segment could be facilitated by new initiatives, technological advances and growing attention from key players. .
Off-trade distribution sectors such as wine shops, supermarkets, hypermarkets, are the chief widespread distribution channel for alcoholic drinks brands in Australia. They are quite famous among consumers for owing price discounts, other advantages and “all under one roof” offers. They sell common brands of alcoholic drinks and very standard as well as private brands .
Modern grocery leads distribution across all categories making it the largest alcoholic drinks channel by quite some margin. Modern grocery retailers have extensive reach in many Western European markets due to its well-developed supermarket landscapes, of all Western Europe is the most developed region for the channel.
Internet retailing is growing as the fastest channel share rise in alcoholic drinks over 2012-2017. The momentum would be boosted with the ever-present and ever-widening penetration rates of special apps, the clout of major third-party online retailers and, in recent times, initiatives from key alcohol giants.
The Australia alcoholic drinks market is a highly competitive and cluttered in nature with a presence of large number of existing and emerging new players and brewers. Major players in the market comprise of companies such as LION, Australian Beer Company Pty Ltd., Anheuser-Busch InBev, Accolade Wines, Vickery Wines and several others.
Competitors are taking strategic initiatives and gaining confidence of their consumers to occupy a good market share and boost the competition over the forecast period. The alcohol beverages industry provides jobs for more than 404,000 Australians and injects more than $19.7 billion every year into the Australian economy, including a massive $5.9 billion in tax revenue .
The increase in consumer spending on recreational activities and growth in social acceptance has led to a sustained increase in the demand for alcoholic drink products, impacting the packaging market. Packaging plays an important role, with a wide range of offerings by alcoholic drink manufacturers contributing to the market growth.
Glass is the major material used for packaging, apart from metal cans and PET bottles . Companies are indulging in expansion to more and more cities, countries as well as across the value chain
Key Market Players
There are abundant retail chains in the country such as Coles, ALDI Liquor, Dan Murphy (Woolworths), Woolworths Liquor and BWS. They sell numerous brands of alcoholic drinks in the country attracting consumers by providing discounts .
Major alcohol companies (producer and distributors) in Australia are as follows:
Anheuser-Busch InBev : Anheuser-Busch InBev is the world’s largest beer company and it Owns more than 400 beer brands of which seven of them are the most valuable beer brands in the world. It has its operations in over 50 countries and sells their beers in over 100 countries.
Pernod Ricard Winemakers Australia : This Company is an Australian subsidiary of Pernod Ricard. Its wine brands include Carrington, Poets Corner, Jacobs Creek, Trilogy, Lawson’s, Richmond Grove, Wyndham Estate etc. In the financial year of 2015, it had revenue of $537 million and in 2016 company had 9.4% wine market share in Australia.
CUB : This company is now owned by AB InBev. This company’s beer and cider brands include Beck’s, Budweiser, Bulmers, Carlton, Cascade, Corona, Crown, Foster’s, Great Northern, Grolsch, Hoegaarden, Leffe, Matilda Bay, Mercury, Peroni, Pilsner Urquell, Pure Blonde, Stella Artois, Strongbow, Victoria Bitter (VB), Yak Ales. Spirits (including RTDs):
Akropolis Oyzo, Cougar Bourbon (includes RTDs), Coyote Tequila, Karloff Vodka, Prince Albert’s Gin, The Black Douglas (includes RTDs). In 2016, CUB had 42.1% of the beer market share in Australia and it made estimated revenue of $1.73 billion in 2015-16.
Accolade Wines Australia: This is fifth largest wine company in the world and is considered to be the number one wine company in Australia and the UK by volume. Accolade owns 45 brands and delivers approximately 38 million cases of wine to more than 140 countries per annum. In 2016 it had 8.9% wine market share in Australia and was able to generate total revenue of $553.2 million.
Cooper brewery: In 2016 Cooper brewery estimated to have 4.7% of the beer market share in Australia making it the largest Australian-owned brewery. It sold 81.5 million litres of beer and had $245 million revenue during 2015-16.
It is famous for its Brands include such as Coopers Ale, Stout, Premium Lager and light varieties, Brooklyn, Carlsberg (Carlsberg Group beer, distributed by Coopers Brewery), Kronenbourg 1664 (Carlsberg Group beer, distributed by Coopers Brewery), Mythos, Sapporo, Thatchers Gold Cider.
LION: Lion is a leading brewer in Australia. It owns four of the top ten beer brands in Australia. In 2016 the company had 42.6% of the beer market share in Australia estimated revenue of $1.83 billion in 2015-16. It is a founding member of Alcohol Beverages Australia.
Its beer and cider brands include: 5 Seeds Cider, Emu, James Boag’s, Hahn, Heineken, Guinness (Diageo product – Lion manages the brewing, distribution, sales and marketing in Australia22), James Squire, Swan, Tooheys, Kirin, Little Creatures, XXXX Gold, West End Draught, White Rabbit etc.
Diageo Australia: Diageo is a Sydney based Australian company. It is also a founding member of Alcohol Beverages Australia In 2016 Diageo Australia generated total revenue of $535.7 million and 24.5% of spirit market share and 23.5% of RTD mixed spirit market share in Australia. Its Beer brands include: Guinness (managed by Lion in Australia) Spirit brands include:
Baileys, Bulleit Bourbon (includes RTDs – Bourbon & Cola), Captain Morgan Rum (includes RTDs – Rum & Cola), Gordon’s Gin (includes RTDs – Gin & Tonic, Elderflower Spritz), Bundaberg Rum (includes RTDs – Rum & Cola, Bare No Sugar Cola, Mutiny Spiced Rum & Zero Sugar Cola, Johnnie Walker (includes RTDs – Red Label & Cola, Red Label & Dry), Tropics Coconut & Pineapple with Soda, Tropics Mango & Passionfruit with Soda), Ciroc Vodka, Don Julio tequila, J & B Scotch Whiskey, Ketel One Vodka, Pimm’s (includes RTDs – No 1 Cup Lemonade & Ginger Ale, Sparkling Cup), Smirnoff Vodka etc .
The alcohol industry in Australia is good and flourishing. Statistics show that alcoholic drinks are popular among a good number of Australians above fifteen years of age.
Also, advertisement opportunities through billboards, radio and television act as good market drivers. However, increasing awareness about hazards of alcohol consumption and many people opting for a changed lifestyle without alcohol are restraining its growth.
The huge number of job opportunities act as a compensation for this restraint, by employing a good number of people in this tough job market. The Australian alcoholic drinks market is expected to reach US$ 32.44 billion by 2025, and this proves to be a promising forecast for the growth of alcohol beverages consumption market in Australia.
- < http://nadk.flinders.edu.au/kb/alcohol/consumption-patterns/frequency-consumption/how-often-do-australians-drink-alcohol/
- ACMA: Australian Communications and Media Authority
- CAGR: Compound Annual Growth Rate
- FARE: Foundation for Alcohol Research and Education
- US$: US Dollar