Japan to dominate FAB market
flavoured alcoholic beverages (FABs), despite continued strong
growth in the market which usurped its position, the US.
According to a report from market analysts Canadean, 2003 will see Japan again become the largest market, after two years of playing second fiddle to the US, helped ironically by the continued recession in the Asian country.
Consumers have been increasingly attracted to relatively inexpensive FABs during the recession, Canadean said, while continued diversification of the Japanese alcoholic drinks market has also helped drive sales, with FABs meeting growing consumer demand for low-priced, low-alcohol products.
This recovery is set to continue, with Canadean predicting that by 2005, Japan's consumption of FABs will have reached almost four times the figure in 1998, keeping it well ahead of the US, despite continued growth in that market as well.
Supported by substantial marketing campaigns and the success of several new brands, FABs are the fastest growing of any major spirits category in the US. However, some well established brands declined sharply in 2003 and the potential reclassification from beer to spirits could pave the way to FABs no longer being available through convenience stores.
Consumption in the third largest market, the UK, looks like expanding by around 3 per cent in 2003, Canadean said. Growth does appear to be slowing after the spectacular expansion of recent years, but this could prove a godsend for brand owners who have found it hard to keep up with demand over the last few years.
Canadean suggested that most would take advantage of the lull to consolidate their brand positions before moving onto the next stage of category development with brand extensions and new launches.
Elsewhere, there is likely to be further strong growth in Russia and Australia, where consumption should rise by 32 per cent and 18 per cent respectively, but Canadean predicts declines in the markets in Argentina and Ireland.
In Argentina, sales have been affected by the high cost of PET packaging following the devaluation of the peso, as well as a distinct lack of promotional funds, while Irish growth of 29 per cent in 2002 has been brought to an abrupt halt by the subsequent increase in excise duty.
Overall, the short term future for FABs looks healthy, with total consumption predicted to rise by 15 per cent in 2003 and by a further 19 per cent by 2005, the report concludes.
