The wine market as a whole is also enjoying good growth, thanks to a growing economy in Singapore and high disposable incomes among consumers.
Wines imported from Australia, France and Chile are among the premium products growing in popularity.
The Singaporean wine market was valued at over $1bn USD in 2016, having grown at a CAGR of 5.5% during 2011-2016. Such growth is expected to continue at similar rates: with a CAGR of 5.4% predicted for 2016-2021, reaching $1.4bn by 2021.
Still wines are the most valuable category, outstripping both sparkling and fortified wines. However, both still and sparkling are predicted to enjoy similar rates of growth (5.2% and 5.1% CAGR respectively) in 2016-2021.
Fortified wines show slower growth at 3.2% CAGR for 2011-2016.
Singapore’s economy grew by 5.2% in Q3, 2017: the fastest in almost four years. Unemployment rates are also low: falling to 2.1% in September 2017.
Such growth is leading to ‘considerable affluence’ among consumers, who are turning to premium wines. Meanwhile, there is a growing trend of collecting vintage wines.
Ronan Stafford, lead consumer analyst, GlobalData, said: “As the Singaporean economy continues to grow and consumer spending increases, consumers are likely to trade up to more premium offerings rather than mainstream or value wine products. Premiumization opportunities are present across all wine categories, especially within the still and sparkling wine categories, given their strong growth rates.”
Singapore has few domestic winemakers: opening up opportunities for international winemakers who already control a significant share of the market.
“Foreign wine producers should look to capitalize on the premiumization movement by introducing luxury premium wine offerings into the market."
Treasury Wine Estates Vintners Limited is the largest wine producer in Singapore, with a 6% volume share of the market in 2016.
‘Sin taxes’ also boost premium sector
Singapore, however, has a large Muslim population that abstains from alcohol: one of the limiting factors for the market.
The country also has ‘sin taxes’ which tax items such as wine, spirits, beer and tobacco. However, the effect of this has been to create a market with a low private label sector but strong premium sector.
“The low private label presence highlights the premium wine preferences of local consumers in Singapore,” said Stafford. “The fixed ‘sin’ tax on alcohol is also likely to affect the demand for cheaper private label wines, as consumers are likely to give preference to higher quality wines which better justify their higher price points.
“Therefore, premiumization opportunities are rife within the market, given that producers need not worry about a significant presence of low-price private label products.”