Dutch spirit producers face shrinking market, experts say

By staff reporter

- Last updated on GMT

Related tags European union Netherlands Rabobank

The market for Dutch spirits continues to shrink - and demand for
the world famous jenever gin will halve over the next 12 years, a
report has said.

According to Rabobank's report on the country's spirit industry, the future does not look promising and in some cases the " only path to profitable growth lies abroad."

Historically, the backbone for the spirit industry has been jenever gin and liqueurs.

Jenever gin is juniper-flavored and strongly alcoholic traditional liquor of the Netherlands.

But over the last 40 years demand for traditional drinks has " dropped considerably."

Jenever production still makes up a quarter of the spirits market, but if demand continues to drop the future of the sixty distillers making the product will be put into doubt.

As the market for Dutch spirit continues to shrink so does the profit pool to finance future investments, Rabobank said.

" Margins have now become extremely slim and have fallen below the European benchmark for similar companies.

This will in all likelihood add up to a major obstacle when future investment becomes inevitable," the report said.

Foreign companies are unlikely to purchase medium sized Dutch distillers, Rabobank said.

Instead these companies will have to create their own "paths to the future."

This may be made even more difficult because of the shrinking profit pool which is too low to make the necessary company investment for the future.

In these cases opportunities for growth are abroad.

As challenging times lie ahead for the Dutch spirits industry, European-wide spirit producers are faced with adopting a voluntary EU-wide responsible drinking charter.

The charter is an industry agreement to self-regulate how it markets its products in a bid to head off regulatory action that could impose restrictions on advertising and promotional activities.

The charter forms part of a strategy for spirits manufacturers to adopt responsibility initiatives, designed to counter concerns over how spirit producers products are being consumed.

Excessive consumption of alcohol is estimated to kill 200,000 Europeans a year, according to the European Commission figures.

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