Milestone Beverages: There are bigger fish to fry other than China

Producers should look beyond China and Hong Kong for growth opportunities in Southeast Asia, where markets such as Indonesia, the biggest economy in Southeast Asia, the Philippines, South Korea and Taiwan might offer “less competition, better margins and partnerships”, according to a drinks industry veteran.

Joe Milner, managing director of Milestone Beverages, amassed a wealth of experiences in the drinks trade while working for industry giants such as Diageo and Constellation Brands.

“Without a doubt, China has huge potential for future growth, and many industry players are obsessed with getting it right in the market. I feel that unless you are willing to invest heavily ahead in resource or look at a creative infrastructure with the right partner, I believe there is easier lower hanging fruit in the region like Southeast Asia, Taiwan and [South] Korea,” says Joe Milner, who worked for Constellation Brands and Diageo before starting his own business Milestone Beverages, a fast-growing wine and spirits producer and distributor in Asia Pacific, as its managing director.

Focusing on Asia, the company imports and distributes a varied portfolio of well-priced wines and spirits including Australian wine brand Blowfish, Italy’s Atilius Wines, Le Boudoir Bordeaux, Taisteal Single Malt Scotch Whisky, Langley’s Gin and Manatapu from New Zealand.

“Albeit dominated by Scotch, the Taiwan and Korea markets have a bourgeoning cocktail scene, higher disposable incomes and a relatively mature wine culture seeking value for money. In these markets, I feel there is less competition, better margins and easier to form partnerships,” he continued.

Admittedly, the region’s overall high tax structure, the chokehold on alcohol advertising and prohibitive measures on alcohol consumption due to religious reasons in most Muslim and Muslim-majority countries can deter producers and merchants.

However, in key Southeast Asian countries like the Philippines, Indonesia and Thailand, economic growth on average sustained a 5% growth rate in 2018. With expanding wealth, there’s certainly room for growth in drinks sector when disposable income increases. Indonesia, for instance, is tipped by Milner as a key growth engine.

The country has already become Southeast Asia’s biggest economy, and despite being a Muslim-majority country with high taxes for alcohol, there are plenty of opportunities, according to Milner, “if you can play your cards right”.

“For sure, you are restricted with the big portion of the population being Muslim that don’t drink, but the average consumption per capita is high compared to other parts of Asia. However, the caveat to this is that there are definitely high barriers to enter into the market, with complex registration requirements and laws that seem to be ever changing. Recently, many players have diverted attention to local production for spirits, like IMFL in India many years ago. My suggestion for industry players is to consider this opportunity seriously with the right partner if they want to turn the dial in the market.”

Additionally, the Philippines proved to be a valuable market for the drinks sector, with laxer rules on alcohol advertising, a growing middle class and lower tax regime.

“The market has a relatively low tax structure for alcohol, huge emerging middle class that are thriving on premium alcoholic beverages, and importantly the laws for advertising are quite liberal. The market also has a surprisingly established retail infrastructure, which industry players can leverage,” Milner explained.

In these emerging markets, which often means value for money products with smart packaging, can often grab consumer interest. Citing an example, the company executive revealed its Blowfish wine range was particularly a hit in Thailand and Philippines. “On top of a very attractive pricing strategy, our strapline is ‘taking the seriousness out of wine’.”

Southeast Asia has such a young and inexperienced wine culture and to teach consumers that wines does not have to be for the privileged is something we strive on. The biggest growth for wine consumption is millennials in Asia so we target beach parities, wine in cocktails and music events as part of our marketing. This strategy, along with some key retail listings has really made this our fastest growing brand in the region.”

Asked about the key trends shaping Southeast Asia this year, the industry veteran said, “low alcohol, and healthier options for wine and spirits has and will continue to trend over the years.  As Millennials start to look for a more balanced lifestyle, there will be a link to their choices of drinks they consume. Novelty, I think will also play a key factor in trends, including innovative packaging and liquids.”

However, the “biggest and most exciting trend” in recent years is products produced in Asia for domestic and export markets, he noted, saying “New Distilleries and Asian brands are popping up a at a fast rate across the region, and there will always be an infatuation for Asian products especially in Europe.” 

For more information on Milestone Beverages and its products, please visit Milestonebeverages.com or contact joe@milestonebeverages.com.