Business Trends

Will Consumers Drink Through the Global Downturn?

In Uncategorized on April 8, 2009 at 11:54 pm

With global unemployment tipped to rise above 10 percent during the year, and consumer confidence slumping across all developed and most developing markets, many people are wondering whether any industry will be spared. Alcohol production has been touted as one group of industries which maybe recession proof, but IBISWorld analysis suggests otherwise. Global Spirits Manufacturing is the only alcohol industry expected to grow during 2009.

Global Sprits Manufacturing is expected to fare best, as momentum from previous years pushes industry revenue up by 2.5 percent during 2009 – compared to 12.8 percent growth in 2008. Consumers in China, a key growth market, are expected to be less affected than the global average. Chinese consumers will continue to spend more on spirits, resulting in an increase in Chinese Distilled Alcohol Manufacturing of another 11.9 percent. This will be the main driver of global industry revenue growth with consumers in developed markets expected to curtail their spending on spirits.

Global Sprits Manufacturing is expected to fare best, as momentum from previous years pushes industry revenue up by 2.5 percent during 2009 – compared to 12.8 percent growth in 2008. Consumers in China, a key growth market, are expected to be less affected than the global average. Chinese consumers will continue to spend more on spirits, resulting in an increase in Chinese Distilled Alcohol Manufacturing of another 11.9 percent. This will be the main driver of global industry revenue growth with consumers in developed markets expected to curtail their spending on spirits.

Global Wine Manufacturing relies heavily on international trade, which accounts for 43.3 percent of industry revenue. Major importers include the USA, UK and Germany – all of which have been hit hard by the global downturn. IBISWorld estimates that U.S. Wine imports will slump by 4.9 percent during the year, whilce major exporting regions such as the EU and Australia will have significantly lower demand for their wine. One wine region which has benefited from the downturn is Argentina, experiencing a surge in exports to the U.S. and a rise of 36.9 percent so far in 2009. As demand in key importing markets falls, global industry revenue will slide by 3.4 percent to $59.52 billion.

The new super brewer in Global Beer Manufacturing, Anheuser-Busch InBev, will find times tough in its first year of operation. Global Beer Manufacturing Revenue is expected to fall by 3.6 percent during the year. While some consumers in developed markets will trade down from spirits towards beer, many more consumers will be trading down from their premium brew towards more standard offerings.

Global Alcohol Manufacturing industries are expected to also suffer through this global downturn. Tough times may drive some consumers to drink – it’s just unfortunate for producers that they will be choosing cheaper beverages, while others may choose to abstain all together.

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