The Center East area gives “important potential” for premiumisation in spirits, notably within the UAE, led by classes similar to whisky, vodka and Tequila.
In accordance with Russell Menezes, IWSR analysis director for the Center East and Africa (MEA), there’s a “clear alternative” for premium spirits manufacturers to ascertain themselves out there, the place the vast majority of quantity consumption nonetheless happens inside the usual and worth segments.
Menezes notes that classes similar to whisky, vodka and Tequila are experiencing development.
“This development has been largely pushed by the inflow of expatriates, which has expanded the patron base and launched new preferences,” he says.
Menezes additionally factors outs that buyers within the Center East are keen to experiment with new manufacturers so long as the “pricing stays aggressive inside the usual section”.
He provides: “Manufacturers should strike a steadiness between high quality and affordability to realize traction.”
IWSR knowledge confirmed that whole spirits volumes rose by 1% within the area final 12 months and is anticipated to extend at a compound annual development fee (CAGR) of two% between 2024 and 2029.
Whisky stays the largest class within the Center East, adopted by vodka, aniseed (similar to arak, ouzo and raki), gin and brandy.
Whisky volumes had been stagnant final 12 months, whereas aniseed spirits dipped by 1% in 2024 and brandy fell by 2%. In the meantime vodka and gin each noticed an uptick of 1%.
Aside from vodka (which is forecast to be flat), these 4 classes are anticipated to develop their volumes barely over the following 5 years.
Tequila rose by 16% from a small base final 12 months and is forecast to extend by 3% over the following 5 years. The class holds a 2% share of whole spirits within the area.
Tequila’s growing presence within the Center East was evident on the inaugural Gulf Bar Present this 12 months, with the likes of Casa Maestri, Don Julio, Mijenta, Komos, Barajas, Teremana and Patrón exhibiting.
Over the previous 12 months, Teremana (the model based by actor Dwayne ‘The Rock’ Johnson) has entered the Center East market, alongside Tequila Enemigo.
Dubai’s cocktail scene
Many manufacturers have focused the UAE, notably Dubai, as the realm with probably the most alternative for development. Dubai has develop into a vacation spot for cocktails with its sky-high venues. It was additionally the situation for this 12 months’s Gulf Bar Present, which is able to return to the town subsequent 12 months on 7-8 April.
The present’s organiser, Hugo Goncalves, says: “The UAE is a really thrilling market, particularly Dubai, and you’ve got most likely among the finest operators on this planet current there. The bar scene is evolving day after day, which is nice to see.”
The ‘world’s most costly cocktail’ was additionally created at restaurant and cocktail bar Nahaté in Dubai in April, made with a particular version Patrón Tequila mix.
Two Dubai venues (La Petite Maison and Mimi Kakushi) had been additionally nominated for Finest Worldwide Restaurant Bar at this 12 months’s Spirited Awards.
By way of developments throughout the MEA, Menezes notes: “RTDs are following developments in spirits, with key spirit manufacturers getting concerned. Tequila is rising and is driving the wave throughout all worth bands in each areas. Center East has an enormous affinity to blended and malt Scotches with important quantity consumption.”
South Africa was additionally pinpointed as a market with a “sturdy urge for food for spirits” and “rising potential for premiumisation” as shoppers search to “keep a complicated social picture”.
“Classes similar to Cognac, brandy, and Tequila resonate notably nicely on this market, whereas gin continues to take care of a strong presence,” Menezes says. “Nigeria is one other key market with a notable demand for spirits. Smaller format packaging performs particularly nicely, providing comfort and a notion of affordability that appeals to a broad shopper base.”
Challenges within the area
Resulting from sturdy cultural and non secular influences, the amount of alcohol consumed within the Center East tends to be decrease than different markets. Gross sales are typically restricted to licensed venues similar to bars and responsibility free shops.
Saudi Arabia and Kuwait are the one Gulf international locations with a ban on the consumption and sale of alcohol, whereas alcohol is tightly regulated in markets such because the UAE, Bahrain and Quatar.
“Alcohol is simply out there by diplomatic channels (Saudi Arabia opened its first alcohol retail retailer for diplomats solely),” Menezes notes.
“Many international locations within the area, particularly these with sturdy Islamic governance, have strict laws or outright bans on the sale and consumption of alcohol. This limits market entry and distribution channels considerably.
“Even in additional liberal markets just like the UAE, advertising and branding have to be fastidiously tailor-made to respect native norms and keep away from backlash.”
Menezes notes that there are restrictions on promoting, packaging, and promotional actions for alcohol. In lots of international locations, alcohol promoting is just not allowed on TV, radio, or public billboards.
Goncalves stated the principle concern for spirits manufacturers is “the best way to get to the entrance of distributors and hospitality choice makers”.
The Center East’s greatest alcohol distributors embrace Maritime and Mercantile Worldwide (MMI) and African + Japanese.
Different challenges within the area embrace import restrictions, excessive tariffs and complicated licensing necessities, says Menezes, which “could make distribution expensive and logistically difficult, particularly for brand new entrants”.
Whereas the on-trade is a “key driver for spirits gross sales”, Menezes notes that in some markets venues are “restricted or closely regulated, lowering alternatives for model visibility and shopper engagement”.
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