Asian boom in luxury demand to continue
Asia is expected to account for around 40% of the world’s total luxury demand by 2014 and to have reached a value of over US$310 billion by 2015.
With GDP growth of 5% and above across large Asian markets, economies are rapidly developing and shifting in response to a noticeable emerging middle class with disposable income.
The net wealth of Asian millionaires has now eclipsed that of rich Europeans.
According to the Merrill Lynch World Health Report 2011, the wealth held in Asia now stands at US$9.7 trillion, compared with US$9.5trn in Europe, with Asia now home to 3.3m “high net worth individuals”.
Currently 27% of all global luxury goods are bought in Asia and 43% are bought by Asian consumers. The region is expected to account for around 40% of the world’s luxury demand by 2014 and to have reached a value of over USD$310bn by 2015.
The IWSR Global Forecasts Report 2010-15 says Asia Pacific is forecasted to account for 27% (volume) of the super-premium and above spirits by 2015, 73% (volume) of all ultra-premium and above spirits and 80% of the prestige spirits segments in the next five years.
Rodolphe Paoli, managing director of Global Reserve at Diageo, told the drinks business: “Asia is undoubtedly the key growth region where China and Korea are valuable markets for ultra- and super-deluxe whiskies, but the Middle East, India and parts of South America are also growing strongly.
“We are seeing particularly strong opportunity in Latin America and the Caribbean and of course Asia Pacific and are excited about these opportunities.”
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This year has also seen healthy growth in the premium segment in the US. Ivan Menezes, president, Diageo North America, commenting on the year ended 30 June 2011, told db: “While overall consumer confidence remains subdued we have seen some recovery and, importantly for our business, this recovery has been stronger in the premium, and especially the super-premium, segments.
“Against this background we have focused on value creation. We have reduced the level of promotional activity, invested behind our premium brands and driven strong growth through innovation.
“The result has been that volume has been maintained while net sales grew 3%.
“Focus on supply efficiencies and better top line mix led to gross margin improvement. Overheads were reduced as marketing was increased and operating profit grew 8%.
“We have put in place improvements to our sales structure and distribution footprint that will drive further efficiencies and even better alignment with our wholesalers, all of which will enhance our strong platform.”
For more on the luxury spirits market, see the December edition of the drinks business.
