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The Warsaw Voice » Business » February 27, 2015
Business & Economy
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Quality Alcohol More Popular
February 27, 2015   
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Consumer trends on the Polish market for alcoholic beverages are changing, according to a survey by consulting firm KPMG. The study shows that a growing number of Poles are choosing quality products and brands, and are looking for new, original or little-known drinks.

According to KPMG’s report on the Polish market for alcoholic beverages, in 2013 consumers in this country bought more than zl.41.1 billion worth of alcoholic beverages (in terms retail price). As in previous years, beer and vodka played a key role in sales, claiming 47 percent and 30.7 percent of the market respectively. However, the market share of wines, whisky, liqueurs and flavored spirits is steadily increasing.

Beer and vodka are the two categories that have dominated the Polish market for years. They attract a large group of regular customers—73 percent and 43 percent of adults respectively reach for them at least a few times a year. Their position, however, is gradually weakening as consumers explore other product categories. The position of vodka has also been affected by regulatory changes, including an increase in excise tax on ethyl alcohol in 2014. In terms of expenditure on alcoholic beverages, sales of vodka are slowly shrinking and beer sales are stabilizing, accompanied by a growing role for grape wine (6.3 percent), whisky (4.3 percent), and liqueurs, tinctures and flavored spirits (5.4 percent).

According to KPMG experts, the Polish market for alcoholic beverages is changing under the influence of three key consumer trends. “First, Poles are looking for higher-quality products and higher-value brands, which translates into premiumization [a move toward more expensive premium products] in the case of multiple categories,” says Andrzej Bernatek, head of the consumer markets industry department at KPMG in Poland. “We are also seeing a strong trend toward innovation resulting from strong consumer openness to new ideas and a readiness to try new flavors. At the same time, the market is still under the strong influence of a trend that can be described as value for money, which means a search for the best price deal in relation to the value of a product, and a hunt for discounts and bargains.”

The report shows that three in 10 adult consumers of alcoholic beverages in Poland (31 percent) say that they definitely try to choose quality products and are eager to reach for premium brands. According to the survey—which was carried out among managers in the alcoholic beverage industry—among all the market trends, premiumization will have the strongest influence on the shape of the market in the coming years, regardless of the category.

The result of premiumization on the beer market is the dynamic development of the specialty beer segment—bottom-fermented beers that extend beyond the typical “eurolager” category, and top-fermented beers. Specialty beers (not including flavored beers and beer mixes) already account for about 5 percent of the market in terms of volume.

Tomasz Wi¶niewski, from KPMG in Poland, said, “In contrast to the classic lagers segment, which is already saturated and with which many consumers have simply gotten bored, specialty beers still have good growth prospects. They also allow higher margins than standard products. Both small, owner-run and regional breweries as well as large corporations are taking advantage of this.”

Premiumization also means that sales of whisky are growing strongly. In 2013, half of adult Poles drank this type of alcohol, while 21 percent consumed it several times over the year. In 2013, 19 million liters of whisky were sold with a total value of zl.1.8 billion, six times more than in 2004 in terms of sales volume and five times more in terms of value. What’s more, the industry expects further growth in this category, by up to 8-9 percent a year in 2014 and 2015.

Also growing is consumer interest in classic grape wines. In 2013, Poles bought 142.5 million liters of grape wines (including sparkling wines), worth a total zl.2.6 billion. From 2004 to 2013 sales of grape wines in Poland increased by 56 percent in terms of volume. Although chiefly discount stores are responsible for the rise and it applies mainly to medium-priced products, this is also a trend linked to premiumization. “What the mass consumer is buying today is of much better quality than just a few years ago,” says Wi¶niewski.

According to the KPMG report, a second key trend on the Polish market for alcoholic beverages is a move toward innovation. Poles are open to new ideas and are looking for new and little-known or exotic flavors as well as original products. Such an attitude is exhibited by 29 percent of adult consumers of alcoholic beverages. This trend is primarily visible in the beer and spirits segments and is expected to continue to affect these categories.

Consumers are looking for new products, and producers and distributors are skillfully stimulating this demand. This is especially evident on the spirits market, where flavored varieties of traditional categories such as vodka and whisky are developing. KPMG’s Bernatek said, “Relatively new categories have proved a hit—such as flavored ‘vodkas’ with reduced alcohol content, the sales of which approached 24 million liters in 2013. Added to these are now flavored drinks with about 20 percent alcohol content. The range of products has never been so extensive in terms of flavors and varieties.”

On the beer market, the trend toward innovation has resulted in the dynamic development of the flavored beer category (fruit beers, honey beers and so on) as well as beer mixes. Since 2004, sales of these have almost doubled and now play a major role on the beer market as a whole, with sales reaching 268 million liters in 2013.

The trend toward innovation includes a remarkable rise in the popularity of cider. Just two years ago, few people in Poland had even heard of this drink. Meanwhile, in 2013, 40 percent of adult consumers sampled cider at least once and one in 10 reached for the drink several times, according to the KPMG study.

The survey of alcohol industry executives and consumers shows that premiumization and innovation do not mean that consumers will easily accept higher prices, even for innovative or quality products. One in four alcohol consumers (26 percent) openly and decidedly concedes that they are looking for a low price or better value for money. This price sensitivity among consumers also leads to the visible growth of budget products, including retailers’ own labels and imports. Retailers’ own labels already account for about 8 percent of the beer market in terms of sales and for 6 percent of spirits sales in volume terms.
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