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India and Australia sign an interim trade deal

The India-Australia Economic Cooperation and Trade Agreement (“IndAus ECTA”) was signed by Shri Piyush Goyal, Union Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, Government of India and Mr. Dan Tehan, the Minister for Trade, Tourism and Investment, Government of Australia in a virtual ceremony, in the presence of Prime Minister of India, Shri. Narendra Modi and the Prime Minister of Australia, Mr. Scott Morrison recently.
In his opening remarks during the Joint Press Conference with Mr. Dan Tehan after the signing in ceremony, Shri Goyal said the Australia – India ECTA truly symbolises our Ekta (Unity) & the spirit of cooperation. Terming it a historic day for India, as it is the 1st agreement with a developed country after a decade, Shri Goyal said our relationship rests on the pillars of trust & reliability, aptly reflected in our deepening geostrategic engagement through the Quad & Supply Chain Resilience Initiative.

Stating that India and Australia are natural partners, connected by shared values of democracy, rule of law & transparency apart from our shared love for Cricket, Food & Movies, Shri Goyal said Ind-Aus ECTA is expected to almost double bilateral trade to about $50 billion in five years. He said there is great potential for Indian exports in sectors like textiles & apparel, leather, hospitality, gems & jewelry, engineering goods & pharma, IT, Startups etc. Australia has committed to key areas of India’s interest in Services like Education, IT, Business, Professional Services, and Health & Audio-visual while Australia will also provide Post-study work visas for students, the quota for Chefs & Yoga instructors, and Work & Holiday visas for young professionals.

Tariffs will be eliminated on more than 85% of Australian goods exports to India (valued at more than $12.6 billion a year), rising to almost 91% (valued at $13.4 billion) over 10 years.

Australian households and businesses will also benefit, with 96% of Indian goods imports entering Australia duty-free on entry into force.

India is the world’s largest democracy and the world’s fastest-growing major economy, with GDP projected to grow at 9% in 2021-22 and 2022-23 and 7.1% in 2023-24.

Shri Goyal said the Agreement provides adequate safeguards to prevent circumvention, fuse to protect against sudden surge in import of goods; for the 1st time, mechanism included for compulsory review after 15 years. Underlining that the Ind-Aus ECTA will not only herald a new era of trade & commercial ties, but also take the relationship between our nations to greater heights. Shri Goyal said he will be visiting Australia in the coming days, to take the ECTA to people.

Like true brothers, both nations supported each other during Covid-19. Ind-Aus ECTA covers the entire gamut of the trade & commercial relations, removing trade barriers & opening a plethora of opportunities in both goods & services. Expected that with ECTA, the present bilateral trade for merchandise & services of $27.5 bn (2021), may reach a level of about $45 to $50 billion in the next five years.

It is expected to create new employment opportunities, raise living standards and enhance the overall welfare of the peoples of both the countries. Additional employment generation is expected to be 10 lakhs within the next five years.
Australian wine exporters, however, will have to wait for the full benefits, with tariffs on wine bottles with a minimum import price of US$15 expected to reduce from 150% to 75% when the agreement enters into force. This tariff will then reduce to 25% over 10 years.

Tariffs on wine with a minimum import price of $5 per bottle will be reduced from 150% to 100% on entry into force and subsequently to 50% over 10 years.

In services, Australia has offered 135 sub-sectors to India, while India offered 103 sub-sectors to Australia. Adequate safeguards have been provided to prevent circumvention or diversion of goods from any non-party. Provision for bilateral safeguard measures to protect against a sudden surge in import of goods. For the 1st time, a clause is introduced for a special review mechanism that provides for compulsory review after 15 years in a time-bound manner.

“The IndAus ECTA, encompassing trade in goods and services, is a balanced and equitable trade agreement, which will further cement the already deep, close and strategic relations between the two countries and will significantly enhance the bilateral trade in goods and services, create new employment opportunities, raise living standards and improve the general welfare of the peoples of the two countries,” the commerce ministry said recently in a press release.

In 2020, India was Australia’s seventh-largest trading partner, with two-way trade valued at $24.3 billion, and sixth largest goods and services export market, valued at $16.9 billion. Our Government’s goal is to lift India into our top three export markets by 2035, and to make India the third largest destination in Asia for outward Australian investment.

The Australia-India Economic Cooperation and Trade Agreement (AI ECTA) signed recently will further strengthen that relationship.

Prime Minister Scott Morrison said the agreement would create enormous trade diversification opportunities for Australian producers and service providers bound for India, valued at up to $14.8 billion each year.

“This agreement opens a big door into the world’s fastest growing major economy for Australian farmers, manufacturers, producers and so many more,” the Prime Minister said.

“By unlocking the huge market of around 1.4 billion consumers in India, we are strengthening the economy and growing jobs right here at home.

“This is great news for lobster fishers in Tasmania, wine producers in South Australia, macadamia farmers in Queensland, critical minerals miners in Western Australia, lamb farmers from New South Wales, wool producers from Victoria and metallic ore producers from the Northern Territory.

Benefits of AI ECTA include:

Sheep meat tariffs of 30% will be eliminated on entry into force, providing a boost for Australian exports that already command nearly 20% of India’s market.

Wool will have the current 2.5% tariffs eliminated on entry into force, supporting Australia’s second-largest market for wool products.

Tariffs on wine with a minimum import price of US$5 per bottle will be reduced from 150% to 100% on entry into force and subsequently to 50% over 10 years (based on Indian wholesale price index for wine).

Tariffs on wine bottles with minimum import price of US$15 will be reduced from 150% to 75% on entry into force and subsequently to 25% over 10 years (based on Indian wholesale price index for wine).

Tariffs up to 30% on avocados, onions, broad, kidney and adzuki beans, cherries, shelled pistachios, macadamias, cashews in-shell, blueberries, raspberries, blackberries, currants will be eliminated over seven years.

Tariffs on almonds, lentils, oranges, mandarins, pears, apricots and strawberries will be reduced, improving opportunities for Australia’s horticulture industry to supply India’s growing food demand.

The resources sector will benefit from the elimination of tariffs on entry into force for coal, alumina, metallic ores, including manganese, copper and nickel; and critical minerals including titanium and zirconium.

LNG tariffs will be bound at 0% at entry into force.

Tariffs on pharmaceutical products and certain medical devices will be eliminated over five and seven years.

Minister for Trade, Tourism and Investment Dan Tehan said AI ECTA would also further strengthen the people-to-people links between our countries. India was Australia’s third largest market for services exports in 2020.

“This agreement will turbocharge our close, long-standing and highly complementary economic relationship in areas such as critical minerals, professional services, education and tourism,” Mr Tehan said.

“It will create new opportunities for jobs and businesses in both countries, while laying the foundations for a full free trade agreement.”

Both countries will facilitate the recognition of professional qualifications, licensing, and registration procedures between professional services bodies in both countries.

Australian services suppliers in 31 sectors and sub-sectors will be guaranteed to receive the best treatment accorded by India to any future free trade agreement partner, including in: higher education and adult education; business services (tax, medical and dental, architectural and urban planning; research and development; communication, construction and engineering; insurance and banking; hospital; audio-visual; and tourism and travel.

Australia will also provide new access for young Indians to participate in working holidays in Australia. Places in Australia’s Work and Holiday programme will be set at 1,000 per year and Australia will have two years to implement the outcome. This is expected to contribute to both workforce requirements and to boost tourism to support our post-Covid recovery.

In a boost to our STEM and IT workforces, the length of stay for an Indian Student with a bachelor’s degree with first class honours will be extended from two to three years post study in Science, Technology, Engineering or Mathematics (STEM) and information and communications technology (ICT) sectors.

Australia and India have also agreed to undertake cooperation to promote agricultural trade as part of the agreement and will now work toward concluding an enhanced agricultural Memorandum of Understanding (MoU).

Mr Tehan signed AI ECTA on behalf of Australia during a virtual ceremony with India’s Minister of Commerce & Industry, Consumer Affairs & Food & Public Distribution and Textiles, Piyush Goyal, attended by Prime Ministers Scott Morrison and Narendra Modi.

This announcement builds on the Morrison Government’s $280 million investment to further grow economic relationship and support jobs and businesses in both countries, that includes:

$35.7 million to support cooperation on research, production and commercialisation of clean technologies, critical minerals and energy;

$25.2 million to deepen space cooperation with India and $28.1 million to launch a Centre for Australia-India Relations.

AI ECTA is an interim agreement and both countries continue to work towards a full Comprehensive Economic Cooperation Agreement.

Kerala Government allows pubs, wine parlours in IT parks, tweaks policy

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The Kerala Government has approved setting up pubs and wine parlours in IT parks across the state. The State Cabinet which met recently announced a new liquor policy for the financial year 2022-23 which aims to increase the number of retail outlets in the state to bolster its exchequer. In the last five years, God’s Own Country received `46,546.13 crores through the taxation on liquor.

The government revealed to a RTI that it had collected Rs. 766 crores monthly as tax on liquor which meant that tipplers paid as much as Rs. 25.53 crore as tax on liquor. The highest revenue from the tax on liquor was collected during the period of 2018-19 and 2019-20. A total of Rs. 9,615.54 crore was collected in 2018-19 and Rs. 10,332.39 crore in 2019-20. There was dip in sales of liquor due to the pandemic in 2020-21. The Kerala State Beverages Corporation (BEVCO) posted a loss of Rs. 1,608.17 crore in revenue during 2020-21.

Hence, the government which was toying with the idea of opening up retail vends at different places has tweaked the policy. Now, BEVCO and Consumerfed outlets will be started in those areas which are safely away from populated and residential areas. The demand for allowing pubs in the IT sector has been a subject of debate for some time.

The IT sector in the state was demanding to change its policy on the matter. It is learned that the pubs will have facilities of five-star luxury hotel. The Pinarayi Vijayan government tweaked the liquor policy enabling the opening of more retail outlets and the biggest gainer appears to be the IT parks in Kerala, where special earmarked areas will be provided where IT buffs can have a drink.

Incidentally, the liquor policy of the Kerala government is an annual ritual, when the rules are made for the new fiscal and become applicable from April 1 every year.

The biggest gainer appeared to be the three IT parks in the state, where over one lakh professionals are employed at Technopark, Kochi Infopark and the Kozhikode IT park.

The State Excise Minister MV Govindan pointed out that there has been a long-standing demand from IT professionals for a lack of facilities for recreation. “It has been decided to allow sanction for special licenses to these parks where specially marked areas will be there in the park and facilities will be available for consumption of liquor under strict norms,” said a statement from the Minister.

The government also is giving permission to produce liquor with low alcoholic content or wine from the cashew apple, pineapple, jackfruit and nutmeg. Similar to what Delhi did, Kerala intends to allow buying of foreign liquor from the outlets without queues. The decision to increase the production of liquor in the existing units and launch new units has been taken to address the issues in the production of Indian-made foreign liquor and beer.

The government said that it was taking measures to escalate the production of Jawan rum of Travancore Sugars and start manufacturing at the Malabar distillery.

Highlights of the policy:

• No hike in brand registration fees for liquor selling in cans and glass bottles
• The government proposes to ban sale of liquor in plastic bottles from 2023-24
• The closed outlets will be reopened as premium shops to reduce the rush in existing outlets
• Grant of bar licenses will be only to three-star hotels and above
• Kerala Toddy Industry Development Board will be revived and soon licenses will be issued to operate toddy shops from 2022-23
• Track and trace systems will be introduced for production of liquor and inter-district/intra-range transport
• Beverages corporation will launch liquor-related industries in the state
• All services provided by the Excise department will be made available online from April 1
• Computerisation of foreign liquor outlets
• More vehicles and 100 pistols will be delivered to the excise circle offices of eight taluks
• Mobile app titled ‘Peoples Eye’ to lodge complaints about the trade, stocking and consumption of illicit liquor
• Increase the posts of women civil excise officers
• Appoint 100 youth from scheduled tribes as civil excise officers

Himachal Pradesh new liquor policy aims to boost revenues, while curbing illicit trade

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The Chief Minister Jai Ram Thakur, under whose chairmanship, the Cabinet met announced that the government intended to collect Rs. 2,131 crore revenue from state excise. This would be a jump of nearly Rs. 264 crore and a 14% jump in excise revenues over the previous financial year.

The policy includes renewal of retail excise vends for the financial year 2022-23 at the renewal fees of 4% of the value of unit/vend. The objective is to gain adequate enhancement in government revenue and curb the smuggling of country liquor from the neighbouring states by a reduction in its price.

Annually, Himachal Pradesh earns Rs. 1,800 to 1,900 crore from excise, which includes the sale and consumption of foreign liquor brands and country liquor sold in open markets, vends, bars and restaurants. Excise is one of the biggest source after the sale of power, mining (minerals) and tourism in the hill state.

Country Liquor prices reduced

The brands of Country Liquor will be cheaper as license fees has been reduced. This will help in providing good quality liquor at a cheaper rate to the consumers and they won’t be tempted towards purchase of illicit liquor and evasion of duty will also be checked. In new excise policy, the 15% fixed quota of country liquor for manufacturers and bottlers to be supplied to the retail licensees has been abolished. This step will give the retail licensees to lift their quota from the suppliers of their choice and further assure supply of good quality country liquor at competitive prices. The MRP of country liquor will be cheaper by 16% of existing price.

The fixed annual license fee of bars has been rationalised by abolishing the area specific slabs of license fee. Now throughout the State there will be uniform license slabs based upon the room capacity in hotels.

Fixed license fee of bars in tribal areas reduced

As Himachal Pradesh is known for its tourism, the government intends to provide better facility to the tourists visiting tribal areas and also provide relief to the hotel entrepreneurs, the rates of annual fixed license fee of bars in the tribal areas.

To keep a check on illicit trade and to monitor the manufacturing, operations of liquor, its dispatch to wholesalers and subsequent sale to retailers, it has been made mandatory for all the above stakeholders to install CCTV cameras at their establishments. The government also has imposed stringent penalties to ensure that irregularities detected by the department in liquor bottling plants, wholesale vends and retail vends are curbed. An effective end to end online Excise Administration System shall be setup in the State which shall include the facility of track and trace of liquor bottles besides other modules for real time monitoring.

As per the policy the Renewal fee (non-refundable) for each vend/unit shall be paid @ 4% of the value of vend/unit (MVV) for 2022-23 while filing application for renewal. b) Renewal Fee of Country Fermented Liquor (Lugdi/Jhol) Vends Sr. No. Value of vend Renewal Fee (i) Upto Rs. 1.00 Lakh Rs. 20,000 (ii) Above Rs. 1.00 Lakh upto Rs. 10 Lakh Rs. 25,000 (iii) Above Rs. 10.00 Lakh Rs. 30,000.

The policy said that the Zonal Collectors/District Incharges shall not be allowed to proceed with the conditional renewal of any vends/units. Sub-vends shall be granted to a retail licensee within the State subject to payment of annual license fee of Rs. 8,00,000 or 10% of the vend value whichever is lower subject to the minimum of Rs. 4,00,000. Whereas, keeping in view the issue of smuggling of liquor into the State, the sub-vends shall be granted within a distance of 100 meter from the State border on the payment of annual license fee of Rs. 3,00,000. The sub-vends shall be approved and
granted by the Collector of the Zone concerned.

Fixed License Fee

The fixed license fee on annual basis (including renewal fee) for various Licenses of Foreign Liquor, Country Liquor and Beer per license for the year 2022-23 have been changed.

Type of license Fixed license fee per annum

L-1 (Wholesale vend of IMFS/Foreign liquor/Beer/Wine)	Minimum license fee of ₹20,00,000/- for lifting upto 3.00 lakh proof litres. Beyond 3.00 lakh proof litres an additional ₹3.00 per proof litre
L-1A (Storage of Foreign Liquor in Bond)	₹2,00,000/- excluding such other fee as may be prescribed
L-1B (i) Wholesale vend of Foreign Liquor to L-1 vend only	₹4.25 per P. L. on Foreign Spirit and ₹1.50 per B.L. of RTD Beverages subject to minimum of ₹4,00,000/-
Exclusively for Beer	₹1.50 per B.L. subject to minimum of ₹4,00,000/-.
L-1BB (wholesale vend of imported foreign liquor) from outside India to L-1 & L-2 as well as to the Club and Bar license holders.	Annual fixed license fee ₹5,50,000/-
L-1BIO (License for space holder in Custom Bonded Warehouse for wholesale of imported BIO brands to L1BB)	Annual fixed license fee ₹10,50,000/-
L-1C (Wholesale vend of foreign liquor by distiller or bottler only).	₹6,00,000/-
L-1E for export of IMFS for non-manufacturer wholesale licensee for interState sale	₹3.00 per proof litre subject to minimum of Rs. 10.75 lakh per annum.

The much-awaited Resvera Lounge is now Open!

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Nasik is recognized as the “Wine Capital of India” and is situated in the Western Ghats, on the banks of the River Godavari. Its climate and scenic beauty attract a lot of tourists from around the country as well as overseas. People visit Nashik for a tranquil experience which is perfect for families and friends to spend time with good food and wine. The socialising aspect is a vital part of the wine tour and tasting. Apart from weekend groups, there is also a strong interest among overseas travellers in following wine trails in India. Their goal is to taste Indian wine after having tasted wines from established regions around the world for years. The vineyards offer more than wine tasting. They also provide the opportunity to meet the winemakers and learn about the winemaking process.

Resvera Lounge with unique Jamun wines in its bouquet is opening its doors for a similar experience and to boost Wine Tourism in Maharashtra.

Jamun fruit forms the core of Resvera Wine, a fruit wine made with a focus on creating a delicious flavour. Creating a wine that is consumed and enjoyed 365 days a year is an ultimate goal. This makes it a wholesome gift for each and every wine lover around the world. Resvera is committed to responsible winemaking and produces magical juice from organically sourced Jamun fruit from the Jungles of Maharashtra. Resvera is also responsible for empowering the tribal community of regions where the Jamun fruit is extracted, giving them an opportunity to earn a living. A fusion of Jamun fruit combined with divine smoothness, Resvera creates a rich, luxurious taste that enhances your alluring lifestyle.

This wine’s enticing aroma makes it a perfect pairing with most meals. Take a swirl, breathe the scent into your veins, and taste the magical purple liquid that makes you want to drink more. Resvera Winery creates its wines with a holistic philosophy and believes in giving back to nature.

The taste of Jamun is the biggest USP of the product, since it is a crowd-pleaser, and offers something special that complements the Indian palate very well. Jamun fruit would also be a USP due to its health benefits. It is a rich source of nutrients, is anti-diabetic, and purifies the blood. The brand’s intention wasn’t to become an alcohol brand, but rather to give people a delicious experience. “An elegant and tastefully-done lounge is set beautifully in the midst of the grape city. With Resvera Lounge, we aim to bring a world of contrasts and paint the town with Jamun. A lounge thoughtfully created to give you a one of a kind experience that offers a beautiful ambience. When the sun goes down and the city lights go up, sip on the World’s First Jamun Wine complemented by exquisite food,” says Komal Piyush Somani, Co-founder & Director, Resvera Winery.

“Nashik has been recognised as the Wine Capital of India, and the history of wine in India traces back to as many as 5000 years. Under the one district one product scheme, Govt of India recognised wine as the main product for Nashik. indigenous fruits like Jamun, Mulberry, Jackfruit, Indian Gooseberry, Apple, and Mango have their mention in Scriptures like Rigveda, these fruits have proven health benefits.

There is a need to make these native Indian fruits popular and have a global footprint of the same in the present times. Resvera is processing some of these native Indian fruits and making wine from these fruits. We need to promote these made-in-India wines of fruits that are native to our country” said Nikhil Khode, Co-founder & and Head of Production. “The opening of the Resvera Lounge will make sure that Nashik is a testimony to the age-old traditions of making wine from not only grapes but other native fruits of India which are well understood to the Indian pallet,” continued.

Lastly, Dr Neeraj Agarwal – Director, added, “Every glass of wine enjoyed by the Resvera lovers at this new Lounge will also result in the plantation of few Jamun Trees in the reserved areas. So far Resvera team and all the tribal people associated with Resvera have planted more than 1 lakh trees in the last six years. Creation of this beautiful Resvera lounge is to give a different experience of fruit wines to the wine lovers and our first offering is world’s first Jamun wine.”

With the inauguration of the tasting room at The Cobble Street, Gangapur-Savargaon Road, Nashik, Resvera aims at enhancing the wine experience for its audience. The tasting room reflects the same philosophy that governs Resvera Wines. They are also keen to partner with players in other parts of the country to start such dedicated Wine Lounge of Resvera.

The war in Ukraine could impact how much your favourite beer costs

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Some beer prices are climbing as most parts of the process cost more – from aluminum cans to transportation.

The Ukraine accounts for about 20% of beer’s usage of barley. It’s one of the top five global producers of barley. So brewers, particularly at a global level, will be watching the supply and price of barley.

Molson Coors, which brews Milwaukee’s Miller Beer, and other major brewers have so far been able to absorb the higher costs.

For Craft Beers it’s really hard to absorb price increases in raw materials without passing that along to the customer.

According to a new RaboResearch report (Rabobank), malting barley prices in western Europe are currently 50% above levels seen a year ago. This is anticipated to have a major impact on maltsters, for whom barley inputs make up 65% of costs.

For brewers, the impact is less severe as barley accounts for only 5% of costs. But RaboResearch indicates there is a risk that protectionism could derail the entire value chain, such as in the case that western Europe were to stop exporting malting barley or other grains to countries outside the EU and brewers might not get the right quantity or quality of malt.

21 Mar 2022 – Russia’s invasion of Ukraine has triggered a prominent domino effect on the prices of agricultural commodities, with analysts forecasting critical impacts on both supply and demand of food products. While energy prices are rising as a result of international sanctions on Russia, costs for grains, packaging and logistics are anticipated to surge on.

RaboResearch indicates there is a risk that protectionism could derail the entire value chain, such as in the case that western Europe were to stop exporting malting barley outside the EU. Russia produces around 13% of global barley, while Ukraine accounts for 5% (2020/21 crop). Together, these countries account for 30% of global barley exports, a significant amount.

Although the Black Sea region is a major producer of barley, very few maltsters in the rest of the world depend on its crop, as the barley produced and exported from the region is mainly feed barley.

Although some maltsters in China might use Ukrainian barley, malt plants in the rest of the world are mostly sourcing from other regions. Ukraine and Russia are major barley export nations, accounting for 28% of global barley exports in 2020.

Most Black Sea region barley flows find their way to countries without a strong beer culture. In 2019/20, 64% of Russian barley was exported to the Middle East and 9% to North Africa.

Energy costs have also risen because of the conflict. While prices of oil and natural gas have almost doubled over the past 12 months, there are many points in the value chain where higher energy costs will impact the cost of beer.

Energy is used to turn barley into malt, but RaboResearch estimates that this accounts for just 1% of the cost price of beer. The energy used in the brewing process represents 3% of overall costs. Malting barley prices in western Europe are currently 50% above levels seen a year ago.

But the largest impact is seen in the cost of packaging materials (~25%), which have a major energy component. RaboResearch estimates that the total cost price of beer has risen by 15% as a result of rising energy costs.

“The discussion about the possibility of beverage companies introducing returnable packaging has resurfaced in recent years as part of broader discussions about sustainability. We wonder if, in light of rising fuel prices, the idea might be starting to gain momentum,” states RaboResearch.

Although sea freight is much more energy efficient than road transport, some brewers might be tempted to follow AB InBev’s example to brew Stella Artois near its US consumers. While localising production can save on fuel costs, the diseconomies of scale of a smaller location could offset these benefits.

Although many brewers have focussed on international brands and the premium end of their product offering in recent years, a broad portfolio of products and channels is desirable to offset current risks, concludes RaboResearch.

Russia, the world’s fifth largest country in terms of overall beer drinking, was one of the few major markets around the world where beer consumption actually rose during the pandemic-hit year of 2020. It also grew by a further 3.3% during 2021.

That is why the decisions from Carlsberg and Heineken to pull out completely from Russia will have been difficult.

For Carlsberg, in particular, this is a big deal. The Danish group owns Baltika, Russia’s biggest brewer, which has a market share of just shy of 30%. Carlsberg, which last year made 10% of its total sales and 6% of its operating profits in Russia, had already said that it will stop selling its flagship brand there and will not make any new investments in the country.

Rise of Premium vodka spritz RTDs

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As the RTD trend continues, a number of premium vodka brands are launching their first canned products focussing on the spritz serve.

Spritz itself has become a malleable term in recent years. Once referring to a combination of soda or sparkling water to wine or vodka, it has more recently been adopted by brands such as Aperol for their popular soda water, prosecco and bitter aperitif serve. In the wake of its success over recent years, other brands, and indeed bars, have adopted the name for their own wine, water, and spirit serves.

In the US, the world’s leading RTD market, RTD innovation is picking up pace as consumers continue to demand lighter but flavourful serves like hard seltzers. Demand is especially growing for spirit-based RTDs in the US, which are expected to grow at a volume CAGR of 33% by 2025. Within this segment, vodka and tequila bases are dominant, together accounting for more than 50% of new spirit-based RTD launches between 2019 and the first half of 2021.

As sales of hard seltzers continue to show double-digit growth in the US, growth is picking up in other markets as well, as the hard seltzer category becomes more globally recognised. To capitalise on this trend, some of the largest vodka brands have chosen the ‘spritz’ name for their sparkling water, spirit, and fruit flavour combinations.

Ketel One was one of the first to offer an RTD spritz with the launch of its canned range of Botanical Vodka Spritzes in September 2020. They were aimed at variety of occasions – from moments of relaxation with family, to spending a safe and socially-distanced day at the pool or park, stated Bob Nolet, Ketel One’s master distiller.

The new raft of launches, led by brands including Cîroc, Grey Goose, and Svedka, have a similar aim; of providing guilt-free, portable, easy summer refreshment, as large-scale outdoor events return, and consumers look to make the most of their first summer of significantly reduced restrictions.

In a notable shift from what has gone before however, all of the new wave of products put flavour first, offering trending tropical, tea, and fruit combinations, still at a lower ABV. With them, brands are hoping to capitalise on the mood of cautious hedonism – alongside the ongoing health and wellness trends – that look to define the summer.

Diageo and brand partner Sean ‘Diddy’ Combs, for example, have launched the brand’s first RTD line, Ciroc Vodka Spritz, as a permanent addition to the brand. The line offers four premium spritz flavours – Watermelon Kiwi, Sunset Citrus, Pineapple Passion and Colada.

Constellation Brands has launched a vodka and tea-based canned line under the Svedka brand. The Tea Spritz line is described as a spirit-based hard seltzer and combines real tea, sparkling water, and natural tropical fruit flavours, and includes three variants; Orange Mango, Pineapple Guava – both of which include turmeric – and Raspberry Kiwi.

Others will likely join in on this new twist on existing RTD trends, as more brands look to claim a part of the market unique from hard seltzers, but that share their many selling points, for themselves.

Two years on from the onset of Covid-19, the global beverage alcohol marketplace continues to exhibit subtle regional variations, characterised by shifts across beer, spirits and RTDs.

It’s a highly detailed picture that defies easy generalisations, as the IWSR’s recent analysis of global beverage alcohol category share 2010-21 shows, with beer demonstrating good resilience in volume terms across many markets – but losing ground steadily to spirits when it comes to value. However, the scene has been disrupted by the remarkably rapid growth of RTDs since 2019, stealing share from all rival categories, but especially from beer.

Volume trends

Beer was severely impacted by the pandemic due to its relatively high on-trade exposure, but has still managed to grow volume share since 2016 in most regions. On a servings-adjusted basis, global beer volumes moved up at a CAGR of +0.2% between 2016 and 2019. However, this was mostly driven by large-scale volume declines for low-priced baijiu in China and vodka in Russia.

The same factors led to a volume decline for spirits at a CAGR of -3.1% between 2016 and 2019 – magnified by public health policies in China and Russia aimed at reducing consumption of low-end spirits. In Russia, for example, this has led many consumers to switch to lower-ABV products such as beer or wine.

Look beyond these trends and it’s apparent that beer is tending to expand its market share in emerging markets, but is declining in mature markets, where spirits and RTDs are generally faring better.

As such, in North America, spirits volumes (on a servings-adjusted basis) rose at a CAGR of +3% between 2016 and 2021, but beer volumes fell at a CAGR of -1.7%. Meanwhile, RTDs surged forward, recording a CAGR of +33.3%.

In Europe, another mature market, the picture is more nuanced: while beer declined at a CAGR of -0.8% between 2016 and 2021, spirits fell too, by -0.6%; however, RTDs rose by +2.9%.

Figures for the emerging region of Africa are skewed by the impact of Covid-19. Pre-pandemic growth for beer, however, was positive, with a CAGR of +3.6%, but was outstripped by the performances of spirits (+4.7%) and RTDs (+7%), 2010 to 2019.

Value trends

The contrast between beer and spirits is more pronounced in value terms, with beer losing share to spirits in every region, thanks largely to premiumisation trends in spirits from 2016.

Beer’s global value share declined from 46% to 39% between 2010 and 2019, and fell further to 37% in 2021. Meanwhile, the value share of spirits has increased from 29% to 38%, and then to 40%, over the same timescale.

Here too there are local exceptions, such as beer gaining share in some emerging APAC markets, and the structural decline in low-end vodka in Russia, leading to migration into beer, wine and RTDs. Beer also staged a recovery in South America in 2021, following lockdowns and enforced on-trade closures in 2020.

The premiumisation trend – “less but better” – for spirits is reflected in a marked increase in price per serve for spirits, particularly from 2016, at a time when beer prices remained largely flat. In terms of average price per serving, spirits moved up at a CAGR of +7.3% between 2016 and 2021. While this value surge is partly explained by volume declines in low-end spirits (baijiu, vodka), it also stems from large-scale investments from brand owners to premiumise their portfolios across mature and emerging markets.

Regional value trends

The latter phenomenon is also apparent from an analysis of category value pools by region: as value per serve has grown rapidly, the value pool commanded by spirits has expanded around the world.

This is especially evident in Asia Pacific, where remarkable growth for spirits has taken share from all other categories except RTDs and, on a regional basis, has led to an erosion of Europe’s value share of the global spirits category. While beer’s value share in APAC declined from 40% to 30% between 2010 and 2019 (and fell further to 28% in 2021), spirits increased its share from 45% to 59% – and reached 62% by the end of 2021.

Category value pool analysis also highlights the astonishingly rapid rise of RTDs, especially in North America, where RTDs more than doubled in value between 2010 and 2019, reaching a 5% value share figure in the region – and then doubled again between 2019 and 2021, reaching 11%.

The rise and rise of RTDs

This remarkable momentum is only partly explained by Covid-19 magnifying pre-existing trends, and there are clear signs that the phenomenon is not merely confined to the US.

On a global basis, RTDs have been growing at around 10% per year (+10% CAGR for the top 20 markets, 2010 to 2021), with a rapid acceleration just before and during the pandemic virtually everywhere. While this shift has been most evident in the US, which recorded a volume CAGR of +34% between 2016 and 2021, consumption is rising fast in a number of other countries, including Canada (+26.1% CAGR, 2016 to 2021) and Japan (+10.6%) – and the majority of the top 20 beverage alcohol markets have witnessed accelerating growth for RTDs between 2016 and 2021.

The SWA has released the 2021 global export figures for Scotch Whisky

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Global exports of Scotch Whisky grew to £4.51bn during 2021, according to figures released recently by the Scotch Whisky Association (SWA), as the industry continues to recover from the impact of the Covid-19 pandemic and US tariffs.

In 2021, the value of Scotch Whisky exports was up 19% by value, to £4.51bn. The number of 70cl bottles exported also grew by 21% to the equivalent of 1.38bn.

Growth in 2021 was driven in particular by consumers in Asia Pacific and Latin America, with value increases of 21% and 71% respectively. Key emerging markets for Scotch Whisky – like India, Brazil, and China – grew strongly. Exports grew by 8% in the United States – the industry largest market by value – despite the first quarter of 2021 impacted by the 25% tariff on Single Malt Scotch Whisky. Exports to the European Union grew by 8% in the first year since the UK left the transition period.

Despite the return to growth in 2021, the value of Scotch Whisky exports has not recovered to pre-pandemic levels, with exports remaining 8% lower than 2019.

Commenting on the figures, Chief Executive of the Scotch Whisky Association Mark Kent said, “The global footprint of the industry in 2021 is a clear sign that the Scotch Whisky industry is on the road to recovery.

“Value and volume are both up as consumers return to bars and restaurants, people return to travel and tourism, and we all return to a degree of normality after a period of enormous uncertainty for consumers and business.

“Scotch Whisky growth in global markets means more jobs and investment across Scotland and the UK supply chain. The industry has continued to invest in its production sites, tourist attractions and workforce to ensure that Scotch Whisky remains at the heart of a dynamic international spirits market and attracts new consumers around the world.

“But this this is no time for complacency. The industry continues to face global challenges, including ongoing trade disruption, growing supply chain costs and inflationary pressures, and undoubtedly there is some road to run before exports return to pre-pandemic levels.

“The UK and Scottish governments should do all they can to support the industry’s continued recovery by making the most of global opportunities, including the ongoing UK-India trade talks, ensuring fairness in the UK duty system, and investing in a more sustainable future as the industry works to reach net-zero by 2040.”

Summary

Export value of Scotch Whisky in 2021 was £4.51bn, up £705m compared with 2020, but down £403m compared to 2019.

Export volume of Scotch Whisky in 2021 was 1.38bn 70cl bottles (equivalent), up 238m 70cl bottles compared with 2020 and up 73m compared to 2019.

On average, 44 bottles of Scotch Whisky are exported every second (up from 36 bottles per second in 2020).

Top 10 Markets

The largest export destinations for Scotch Whisky (defined by value) in 2021 were:

USA:	£ 790m	8.4% (£729m in 2020)
France:	£ 387m	2.8% (£376m in 2020)
Taiwan:	£226m	24.3% (£182m in 2020)
Singapore:	£212m	-14.3% (£247m in 2020)
China:	£198m	84.9% (£107m in 2020)
Latvia:	£156m	-11.8% (£176m in 2020)
Germany:	£148m	6.4% (£139m in 2020)
India:	£146m	42.9% (£102m in 2020)
Japan:	£133m	16.2% (£114m in 2020)
Spain:	£118m	7.9% (£109m in 2020)

The largest export destinations for Scotch Whisky (defined by volume, 70cl bottles equivalent) in 2021 were:

France:	176m bottles	-0.1% (176m bottles in 2020)
India:	136m bottles	44.3% (95m bottles in 2020)
United States:	126m bottles	12.6% (112 m bottles in 2020)
Brazil:	82m bottles	80.5% (45 m bottles in 2020)
Japan:	56m bottles	25.9% (45 m bottles in 2020)
Spain:	48m bottles	32.0% (36 m bottles in 2020)
Mexico:	48m bottles	13.0% (42 m bottles in 2020)
Germany:	46m bottles	7.2% (43 m bottles in 2020)
Poland:	45m bottles	19.4% (37 m bottles in 2020)
Russia:	42m bottles	40.7% (30 m bottles in 2020)

Regional data

In 2021, Scotch Whisky exports by global region (defined by value) were (% change vs 2020):

European Union:	£1360m	8.2% (30% of global exports)
Asia Pacific:	£1210m	21.4% (27% of global exports)
North America:	£1000m	11.2% (22% of global exports)
Central and South America:	£443m	70.7% (10% of global exports)
Middle East and N Africa:	£187m	55.0% (4% of global exports)
Africa:	£157m	14.6% (3% of global exports)
Western Europe (ex.EU):	£98m	6.0% (2% of global exports)
Eastern Europe (ex.EU):	£47m	33.8% (1% of global exports)

Diageo India reports continued growth momentum, thanks to premiumisation

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In the unaudited third quarter, Diageo India has registered an increase in net sales of 15.9%, reflecting a strong quarter driven by resilient consumer demand in the off-trade channel, continued premiumisation and recovery of the on-trade channel. Underlying net sales increased 14.3%, excluding the one-off sale of bulk scotch.

Diageo India said that the Prestige & Above segment net sales grew 20.0%, with strong double-digit growth in our scotch portfolio. However, Popular segment net sales declined 1.7%, while priority states were flat. The Gross margin was 44.1%, down 49bps on a reported basis, driven by input cost inflation, partially offset by favourable product mix and productivity savings. Adjusting the one-off sale of bulk scotch, underlying gross margin was 44.3%, down 31bps.

Ms Hina Nagarajan, CEO, commenting on the quarter and nine months ended 31 Dec. 2021 said, “We have delivered a strong quarter, continuing the growth momentum amidst rising inflation. The broad-based growth in the Prestige & Above segment demonstrates the strength of our portfolio, and the continued agility and resilience of the team. We launched the second limited edition of Epitome Reserve Craft Whiskey, a Peated Indian Single Malt. We continued to expand distribution of the renovated Black Dog Scotch, Signature Whiskey and our innovation offering of Royal Challenge American Pride Whiskey.

We also launched ‘In.thebar.com’ this quarter, our digital platform to drive focussed consumer engagement and celebrations.

Healthy operating cash flow has enabled us to reach debt free status as on Dec.31st 2021. CRISIL upgraded its rating on United Spirits Limited’s long-term bank facilities to ‘AAA / Stable’ while reaffirming its ‘A1+’ rating on the short-term bank facilities.

External operating environment in the near-term will remain challenging, including potential impact from Covid-19 and rising cost inflation. We continue to work with agility and remain focussed on strengthening our portfolio while driving productivity across the value chain. We remain confident in the market potential and continue to stay focussed on our strategic priorities to drive long-term value creation for all our stakeholders.”

The Reported EBITDA was Rs. 491 Crores, up 27.9% and the reported EBITDA margin was 17.0%, up 159 bps, primarily driven by operating leverage on fixed costs. It said that Interest includes a one-off non-debt related charge. Underlying interest was Rs. 16 Crores, down 56.8% driven by reduced debt and lower interest rates.

The profit after tax was Rs. 291 Crores, up 26.7% and PAT margin was 10.1%.

Nine month’s performance highlights:

The reported net sales increased 22.6%, lapping soft prior year comparators. Growth was underpinned by strong consumer demand in the off-trade, premiumisation trend and continued momentum in at-home consumption occasions. Underlying net sales increased 21.9%, excluding the one-off sale of bulk scotch.

The Prestige & Above segment net sales increased 26.9%, lapping soft comparators and favourable product mix. The popular segment net sales increased 11.0%, while the priority states increased 10%. The Gross margin was 44.3%, up 113bps, primarily driven by favourable product mix, productivity savings from everyday cost efficiencies and lapping a one-off inventory provision. It said marketing investment was up 24.9% as the company lapped a reduction in promotional activity during the same period last year due to Covid-19. Marketing reinvestment rate was 8.0% of reported net sales.

The reported EBITDA was Rs. 1,084 Crores, up 88.2% and the reported EBITDA margin was 15.6%, up 544 bps primarily due to recovery in gross margin, operating leverage and lapping one-off costs in the prior year. Excluding the one-off items, underlying EBITDA was up 430 bps.

The reported interest cost was Rs. 52 Crores, down 62.3% driven by debt, interest rate reduction and a net reversal benefit of non-debt related interest charge. Exceptional items include a one-off provision towards an additional demand in relation to a historical customer dispute and tax includes a one-off reversal of 19.2 Crores.

The profit after tax was Rs. 634 Crores, up 343.2% and PAT margin was 9.1%.

United Spirits Ltd reports 27% PAT for third quarter

United Spirits Ltd (USL) has reported a 27 % year-on-year surge in profit after tax (PAT) for the third quarter of financial year 2021-22, which came in at Rs. 291 Crore, up from a Rs. 230 crore during the same period last year.

The PAT margin in Q3 FY22 was 10.1%, the company said. In a press release attached with the quarterly results, USL said it reached “debt-free status” by December 31, 2021, due to its “healthy operating cash flow”. The reported net sales in the three-month period ending December 2021 increased to Rs. 2,885 Crore, marking a 15.9% YoY jump.

The surge was driven by resilient consumer demand in the off trade channel, continued premiumisation and recovery of the on-trade channel, USL said. Underlying net sales increased by 14.3%, excluding the one-off sale of bulk scotch, it added.

“Prestige & Above segment net sales grew 20%, with strong double-digit growth in our scotch portfolio,” the company said. Popular segment net sales, however, declined by 1.7%.

The earnings before interest, tax, depreciation and amortization (EBIDTA) came in at Rs. 491 Crore, which was 27.9% higher as compared to the year-ago period. The EBITDA margin came in at 17%, up 159 bps, primarily driven by operating leverage on fixed costs.

“We upweighted our investment in marketing to support strategic priorities and on-going demand growth initiatives,” USL said.

Gross profit came in at Rs. 1,273 Crore, as compared to Rs. 1,082 Crore in the second quarter. Gross profit margin was 44.1%, down 49 bps on a reported basis, driven by input cost inflation, and “partially offset by favourable product mix and productivity savings”, USL said.

Diageo India chief executive officer Hina Nagarajan, while commenting on USL’s Q3 performance, said “external operating environment in the near-term will remain challenging, including potential impact from Covid-19 and rising cost inflation”.

“We continue to work with agility and remain focussed on strengthening our portfolio while driving productivity across the value chain. We remain confident in the market potential and continue to stay focussed on our strategic priorities to drive long-term value creation for all our stakeholders,” the CEO added.

The operations remained broadly normal for the quarter with sentiment gradually inching up seen in improved mobility and strong festive period helped demand. While input cost pressures continue, the global supply chains remain disrupted with port congestion and container availability issues. However, efforts, it said, are on to ramp up of innovation and renovation agenda, premiumisation trends continue, launched digital platform In.thebar.com during the quarter. It said it aligned itself with the new policies in Delhi and West Bengal, and tax rationalisation on BIO spirits in Maharashtra and West Bengal.

On the outlook, it said it was aiming to retain current demand momentum despite challenging near-term environment, expanding on new productivity initiatives, renovated portfolio well placed to benefit from ongoing premiumisation, and final stages of strategic review of popular brands.

Beam Suntory global sales up 11%, India and China key markets for future growth

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Beam Suntory, a world leader in premium spirits, reported full-year 2021 results, with sales up 11% globally. These results also demonstrated strong growth versus the pre-pandemic year of 2019, with sales also up 11% over the past two years.

The company’s 2021 results were led by sustained strength in off-premise sales, and very strong performance in markets where bars and restaurants reopened faster than expected. Markets including Germany, Russia, Spain, emerging Asia and Global Travel Retail all grew at double-digit rates, as did China and India, key markets for Beam Suntory’s future growth ambitions. Sales in the U.S. grew high-single digits, bolstered by robust demand for premium brands. Sales in Japan, up mid-single-digits, benefitted from strong demand for convenient ready-to-drink beverages like -196x but were impacted by extended on-premise restrictions.

Premium brands to the fore

By brand, results underscore the strength of consumer interest in premium brands. Sales grew double digits for brands including Maker’s Mark, Basil Hayden, Knob Creek, Booker’s and Legent bourbons, Laphroaig, Bowmore and Auchentoshan scotches, Hibiki, Hakushu and Toki Japanese whiskies, Sipsmith and Suntory Roku gins, and El Tesoro and Hornitos tequilas, while On the Rocks (acquired in 2020) continued to show exceptional growth. Beam Suntory’s flagship Jim Beam also demonstrated solid growth despite glass supply constraints affecting certain bottle sizes.

“We’re immensely proud of the results our business has been able to deliver in the face of historical challenges related to the pandemic, including on-premise closures and supply chain constraints,” said Albert Baladi, president & CEO of Beam Suntory. “Our results underscore the strength of our premiumisation strategy that relies on exceptional quality, superior storytelling, and executional excellence across consumer touchpoints.”

Strategic moves with accelerated investments

“Our confidence in the future is reinforced by the strategic moves we’re making, with accelerated investment in our business — including capacity, capabilities and our sustainability agenda — the 2021 acquisition of our route to market in Spain, and our upcoming joint innovations with Boston Beer. The people of Beam Suntory look forward to delivering another year of outstanding performance in 2022.”

Beam Suntory launched Proof Positive in 2021, the company’s comprehensive sustainability strategy, representing a $1 billion+ commitment to making a positive impact on nature, consumers and communities.

The key Proof Positive developments during 2021 include renewable energy usage; water conservation; sustainable brands; consumer focus and DEI (diversity, equity and inclusion).

Renewable Energy Usage: All global manufacturing sites began purchasing renewable electricity (or renewable electricity certificates) in 2021, with the goal of 100% renewable electricity usage at across operations by the end of 2022. The Fred Booker Noe Distillery opened in 2021 in Clermont, KY powered by an electric boiler using renewable electricity. In 2022, a pilot project to generate “green” hydrogen will commence at the Ardmore distillery in Scotland. This work supports the company’s commitment to the Race to Zero initiative.

Water Conservation: Closed-Loop Cooling systems were installed in two of the company’s Kentucky distilleries, significantly reducing water usage. Through watershed sustainability collaborations, the company established the first Peatlands Water Sanctuary (Scotland) and the Charco Bendito Project (Mexico).

Sustainable Brands: Sipsmith Gin & Maker’s Mark both achieved B Corp certification in 2021. B Corp Certification is a designation that a business is meeting high standards of verified performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices and input materials.

Consumer: Beam Suntory has increased options for low and no-ABV drinks with products like Sipsmith FreeGlider and the expansion of Lemon Sour Zero. The company is also applying nutrition labelling to key brands across Europe and the U.S. as part of its voluntary commitment to provide nutrition information and alcohol content information on packaging or online for all products by 2030.

Diversity, equity and inclusion (DEI): The percentage of female new hires increased 6% to 50% in 2021, with the US multicultural employee population increasing by 4% at both the mid- and senior-manager levels. New and expanded opportunities for internal multicultural talent also increased, accounting for 19% of US promotions and 21% for lateral promotions.

‘Nolo’ is soon going to froth in Asia

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Specific to Asia, Carlsberg has five brands brewed in China and one in Malaysia, while it has made its presence felt in Hong Kong and Singapore markets, it is now keen on expanding to other markets in the region. Alcohol free segment accounted for the largest revenue size of USD 2 billion in 2017 owing to the increasing adoption of healthier lifestyles coupled with the benefits of non-alcoholic beer in China, India, and Japan.

Growing at over 7.5% CAGR

According to a Graphical Research report, the Asia Pacific non-alcoholic beer market size was valued at USD 4.3 billion in 2017 and is expected to grow at over 7.5% CAGR from 2018 to 2024. As of now, China is leading in this segment in Asia and the drivers are the adoption of a healthy lifestyle along with shifting consumer preferences towards ‘Nolo’. The report said that increasing awareness for negative health effects of alcohol consumption is among major factors boosting market penetration.

China holds nearly 30% market share in ‘Nolo’

China holds nearly 30% share in launching new non-alcoholic beer products. As mentioned earlier, Carlsberg has four brands – WuSu Fresh Orange & C; WuSu Pineapple & C; Xixia Fresh Orange & C; Xixia Pineapple & C, and Chongqing Beer AFB in China and Carlsberg Alcohol Free in Singapore and Hong Kong while in Malaysia it vends Nutrimalt which is said to be nonalcoholic malt beverage that is nourishing and packed with vitamins and nutrients such as Vitamin C & B complex. It is said to be a great energy booster after a workout.

Manufacturers are launching new beverage brands with different flavours to expand consumer base as it is estimated that there is a sizable market which is looking at healthy brews. An increased attention on both physical and mental health has been cited as a cause of the growth of nolo products, which are increasingly popular among younger consumers.

However, in India the trend is not that perceptible, though non alcoholic brews are making the rounds, mostly propped by young beer drinkers who are either switching from standard beers to non-alcoholic variants or they are willing to taste new beers, both with alcohol or no or low alcohol content ones.

India sees slow but steady growth

Some of the ‘Nolo’ in India include Budweiser 0.0%; Heineken 0.0% non alcoholic lager beer; Kingfisher Ultra non-alcoholic beer; Hoegaarden 0.0% non-alcoholic beer; Kingfisher Radler – non-alcoholic malt drink; Coolberg Cranberry non-alcoholic beer; Crofters non-alcoholic beer; and Barbican. Carlsberg is said to be exploring the market opportunity in India with regard to ‘Nolo’. But it has been steadfast in its commitment to creating a culture of responsible drinking by promoting moderate consumption of products and addressing alcohol-related harm in society. “We therefore aim to celebrate the positive aspects of moderate beer consumption and to position beer as a relevant and responsible choice with a role to play in the ‘good life’ to which modern consumers aspire.”

Young beer drinkers call the shots

As per a survey by Mintel about 40% of young beer drinkers in India are interested in switching from standard-strength beer to low calorie or non alcoholic variants of the brew. The survey pointed out that internet users who were contacted and who had consumed beer in the past six months were interested in exploring alternatives to beer.

Carlsberg’s ‘Sail’ strategy

Carlsberg has set sail for the next five-year journey with its 2016 ‘Sail’ strategy. Since its launch, ‘Sail’ 27 has been providing a clear overall direction for Carlsberg resulting in a healthy and strong company. The company said that “In developing Sail 27, we have aimed at keeping and sharpening our strong strategic, organisational and financial dynamics while ensuring that our direction-setting was refreshed and that our new strategy reflects expected consumer, customer, societal, regulatory, economic and geopolitical trends.”

The Chief Executive Officer Cees ‘t Hart said, “SAIL’27 is the exciting next step in the evolution of Carlsberg. Co-created by a large group of employees and leaders, and built around our purpose, SAIL’27 has clear choices for brands, categories, markets and capabilities, and steps up our ambitions for top- and bottom-line growth.” In essence, SAIL’27 focusses on five strategic levers – portfolio, geographies, execution, culture and funding the journey – for which the company has made distinct strategic choices, defining the focus of our efforts and resource allocation.

Our strategic levers and choices should be viewed as an integrated set of activities that together will drive value for all stakeholders. “SAIL’27 is built around our purpose of brewing for a better today and tomorrow, and our ambition of being the most successful, professional, and attractive brewer in our markets,” Cees ‘t Hart adds.

Collaborative effort 

SAIL’27 is a collaborative, company-wide effort, co-created by over 200 Carlsberg employees from more than 30 different markets. “Talents, experts and leaders from all over Carlsberg Group have brought their day-to-day knowledge and fresh ideas into this new strategy. They have assessed the impact of the current strategy on their local business or function, shared learnings and trends they see impacting the business and challenged our thinking on the future strategy. By bringing such a diverse set of voices the process we have created an even stronger strategic path for Carlsberg,” says Marcela Linke, Director, Group Strategy. 

Carlsberg said that the beer category continues to offer attractive long-term volume and value growth opportunities, though with different growth dynamics between categories and markets. Our portfolio choices target these growth opportunities. In addition, the company sees further attractive growth opportunities for selected categories beyond beer. Today, the Group has attractive widespread geographical presence and no. 1 or 2 positions in 22 markets across Western Europe, Asia and Central & Eastern Europe. While market dynamics are different in the three regions, they all offer appealing long-term revenue and earnings growth opportunities.

Carlsberg ‘Nolo’ brands grow by 11%

Carlsberg’s recent financial statement revealed its ‘Nolo’ brands grew by 11%, making it one of the most successful areas of the business for the brewing giant. While sales of other household names owned by Carlsberg shrunk (namely Tuborg and the Carlsberg brand itself), the ‘nolo’ range demonstrated quite a sizeable growth, which is perhaps indicative of a shift in consumer habits towards alcohol-free beverages.

Carlsberg said it saw good results for its recent launches in the category, including Baltika Zero Grapefruit and Raspberry, Brooklyn Special Effects and Somersby 0.0. In addition, the brewing group entered the Asian market with similar ‘nolo’ products in 2020 too, with the launch of Chongqing Beer AFB in China and Carlsberg Alcohol Free in Singapore and Hong Kong.

What’s driving ‘nolo’ growth?

“Brewers have had to adapt to unprecedented market conditions and one area of success is Carlsberg’s low-ABV or alcohol-free ‘nolo’ brands, which are notable for 11% growth as consumers continue to moderate their alcohol intake,” said Ryan Whittaker, Consumer Analyst at GlobalData.

“Increased health consciousness, which includes both physical and mental health concerns, is causing many to reduce their alcohol intake, and the pandemic has brought all of this to the fore.”

According to GlobalData, 28% of global consumers claim to be buying less beer during the pandemic and approximately 27% of consumers say that they are extremely concerned about their physical health. What’s interesting is that these trends correlate with age, with millennials being both the most extremely concerned about their health and most likely to be buying less beer than before the pandemic. Even otherwise, the millennials are known to experiment, try out new products and that is driving manufacturers to innovate.