While the talk in western economies is all about inflation, recession and strained household budgets, such concerns are not top of mind in many Asian economies – at least not yet. Brand owners in the wine industry, especially those selling premium products, are increasingly focusing on Asian markets beyond China as a way of balancing the potential loss of higher value sales from the US and European markets. And for Australian producers in particular, the continuing tariff situation in China has prompted a widespread pivot to these smaller, but growing, premium wine markets.
In addition to South Korea, which is vying for top spot in Wine Intelligence’s Compass Market Attractiveness Model in 2022, Singapore has emerged as one of the brighter spots in the premium wine universe. Singapore is an expat-led wine market, where import costs and high tax make wine an expensive commodity. However, there is evidence from Wine Intelligence’s latest consumer research of a maturing market, with consumer involvement and spend up and a broadening base of wine drinkers.
Market growth and premiumisation
The wine category commands a 10% share of the beverage alcohol market in Singapore, with beer dominating the industry landscape. Wine volumes grew steadily from 2016 to 2021 across all wine types, and are forecast to have similar growth over the next five years. IWSR data shows that although still wine volumes in Singapore dropped in 2021, the category is expected to rebound in 2022, and continue growing over the next five years. Sparkling wine, meanwhile, has been growing from a small base over the past five years, and is forecast to continue to grow in Singapore, with a volume CAGR of 4%, 2021 to 2026.
Spend on wine is also increasing, especially in informal occasions. The COVID-19 lockdowns encouraged consumers to switch their spend to wine at home and to trade up. This change in behaviour appears to be sustained as restrictions relax and on-trade drinking returns. Consumers are also choosing to drink less but better, helping to further drive the trend towards premiumisation.
Underlying economic confidence appears to be one of the key differentiating factors for Singapore. While consumer confidence in western markets is declining rapidly, Wine Intelligence’s snapshot of economic sentiment suggests that a large majority of Singaporeans are confident about their finances and the future in general. At the same time, consumers indicate that they are strongly motivated by price promotions when it comes to making purchase decisions. The implication for brand owners is that wine consumers will be minded to seek out a more premium product for themselves, but will need incentives or discounts to justify a more extravagant purchase.
Channel usage has remained relatively stable since 2020, with only supermarkets and travel-related channels losing market share. Singapore has high online penetration, with just over half of semi-annual wine drinkers buying wine online. Use of online is highest among more frequent wine drinkers, reaching over two-thirds of the wine drinking population, a similar level to that seen in mainland China. While Covid has boosted wine drinking at home, the on-trade remains an important channel for wine, with Singaporeans enjoying wine in the on-trade at comparable levels to the US and Australia.
The wine market is benefitting from a broadening base of wine drinkers. Despite a fall in wine knowledge levels, the proportion of semi-annual wine drinkers who are highly involved in the category has grown since 2020. The proportion of Millennial and LDA Gen Z wine drinkers is stable as well, unlike in some other markets where we see younger legal-drinking-age consumers leaving the category (or not joining in the first place). Millennial semi-annual wine drinkers tend to be more adventurous than their older counterparts, and enjoy trying new and different styles of wine on a regular basis.
Singapore ranks fifth for natural wine in the Wine Intelligence 2022 SOLA Opportunity Index, driven by high awareness and improving scores for consideration and affinity. Natural wine tops the opportunity index, while environmentally-friendly and organic wines have risen through the ranks as well.
Trade experts interviewed by Wine Intelligence noted how political turmoil in Hong Kong has provided opportunities in Singapore. Capital and expat workforces have been relocating to the market, potentially boosting future wine consumption and allowing the market to occupy a position as a gateway to the region for wine.
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