Industry Trend Analysis - Affluence And Booming Cocktail Scene Driving Premium Alcohol Demand - JAN 2018

BMI View: The robust growth in spending on alcoholic drinks in Hong Kong will be driven by rising affluence levels, as the Hong Kong consumer spends a higher-price point on premium and luxury alcohol. Hong Kong boasts a thri ving cocktail scene , p ushing up the demand for craft gin and l iqueurs a nd c ordials.

Hong Kong is projected to see a growth in consumer spending of 5.4% per annum over 2017 to 2021 in local currency terms, with total spending reaching HKD1.95trn (USD251bn) in 2021, up from HKD1.59 (USD204bn) in 2017. Within our consumer spending breakdown (made-up of food and non-alcoholic drinks, alcoholic drinks and tobacco, clothing and footwear, household goods and personal care and effects), we project the fastest-growing segment in Hong Kong to be a lcoholic d rinks and t obacco, which is estimated to grow by 7.1% per annum over 2017-2021, with the segment forecast worth HKD6.9bn in 2021.

Alcoholic drinks will be the fastest-growing segment out of the two, growing by 7.4% per annum over the medium term (2017-2021) compared to tobacco spending, which will grow by 7.0% in the same period. We forecast strong growth in the alcoholic drinks segment to come as a result of existing high wealth levels, which are continuing to grow. We believe this will drive up spending on premium and luxury alcoholic drinks.

Alcoholic Drinks Spending To Outperform Other Retail Sectors
Retail Sub-Segment (HKD % y-o-y)
e/f = BMI estimate/forecast. Source: BMI, Hong Kong Census and Statistics Department

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