Euromonitor: What Are The Latest Beer Trends In Southeast Asia?

The Asia Pacific region excluding Australasia saw 69 billion litres of beer sold globally in 2018—by far the largest region for beer in the world. However, Asia Pacific saw a net decline in beer volume sales from 2013 to 2018, hurt by shrinking sales in the two largest markets of China and Japan. These markets have been held back by strong competition from alternative beverages such as spirits, and ageing demographics—according to Euromonitor data, Japan and China had a median age of 48 and 38 years respectively in 2018, way above the Asia Pacific average of 31.5 years. While these mature markets are expected to continue to dampen the forecast growth prospects for Asia Pacific, the Southeast Asian region has emerged as the main growth driver for beer moving forward.

Beer volume consumption in Southeast Asia is expected to post a healthy CAGR of five percent up to 2023, with the Indochinese countries and the Philippines being the key growth drivers. Vietnam has a young population with a strong beer-drinking culture, and has increased emphasis by major manufacturers on the market in recent years. For example, Thai Beverage acquired a majority stake in leading player Sabeco in 2017, while Heineken expanded its production capacity to cater to strong domestic demand. All of these are a reflection of Vietnam’s growth potential, as it is projected to overtake Japan as the second largest beer market in volume terms by 2023. In the Philippines, increased willingness by millennials to experiment with premium beer and a strong push by leading players San Miguel and Heineken in improving distribution outreach will propel growth. Cambodia is the market in Asia Pacific with the highest per capita consumption for beer in 2018, with sustained growth expected, buoyed by a young drinking population and aggressive expansion by players such as Khmer Beverages.

Trends shaping the growing Southeast Asian beer market include increased taste sophistication among millennials, the premiumisation of beer in the form of craft beer and opportunities for beer in the home delivery channel.

Millennials want to be different and desire more sophisticated tastes

There are a substantial 155 million millennials in Southeast Asia as of 2018, more than the total populations of Philippines and Malaysia combined. Millennial beverage consumers in Southeast Asia have shown less brand loyalty and a greater willingness to experiment with new and more sophisticated flavours. This is reflected in the high emphasis beer players in the region place on product innovation. Although beer with fruit flavours, such as Tiger Radler Lemon is not a new concept, we have seen more unique fruit flavours such as lychee and strawberry being incorporated into beer in recent times.

There has also been a blurring of lines between alcoholic and non-alcoholic beverages. For example, in Thailand, carbonated brand Est Play unveiled two mocktail flavours of Kamikaze and Pink Bomb in early 2019. While the drinks are non-alcoholic, the use of colour and alcoholic flavours appears to be targeted at millennials and creates opportunities for different consumption moments.

The rise of craft beer in Southeast Asia

The need to cater to consumers who desire unique tastes, coupled with rising disposable incomes in Southeast Asia, has contributed to the premiumisation of beer in the form of craft beer. This will accelerate the growth of niche beer types such as dark beer, as craft beers often come in the form of ale. In Vietnam, craft brewers in cities such as Hanoi and Ho Chi Minh utilise craft brewing techniques learnt from European countries and incorporate local ingredients such as pho to create beer that appeals to local tastes. Even in Thailand, where government legislation provides a challenge for domestic craft breweries, Thai consumers resort to importing craft beer from regional countries such as Cambodia and Vietnam.

Despite the booming craft beer scene, craft beer is still small relative to total beer in Southeast Asia, with craft beer being just under two percent of beer by volume in Singapore and less than one percent of beer in other Southeast Asian markets. However, we can certainly expect more craft brewers springing up across Southeast Asia and honing their skills in the coming years.

Opportunity to tap into the convenience of home delivery

The consumer need for convenience has provided opportunities for beer in an unlikely channel – home delivery. According to Euromonitor International’s 2019 Top 10 Global Consumer Trends, “I want it now!” has become a key consumer desire. Amidst increasingly hectic lifestyles, consumers place a greater emphasis not only on convenience, but also on getting their wants instantly.

Some food delivery services in Singapore have tapped into this to offer quick beer delivery services at a slight premium – Foodpanda promises delivery within 30 minutes, while Amazon’s local delivery subsidiary Prime Now guarantees delivery within two hours. Convenience aside, quick delivery allows for the possibility of fresh cold beer – something that is cherished in the tropical heat of Southeast Asia. Home delivery of beer by food delivery services is still niche and overshadowed by more popular beverages such as bubble tea. However, could this change with a possible pairing of food with beer?

Geographical size and legislations could prove to be the main stumbling blocks in other markets. Food delivery services such as Go-Food, Grab-Food and LINE Man may be growing fast across the region, although the larger sizes of other countries apart from Singapore would provide a stronger logistical challenge in delivering beer. Moreover, markets such as Thailand have to adhere to regulations that restrict the advertising and delivery of beer. Nevertheless, the very idea of marrying beer delivery with food deliver provides a fresh means for beer players to reach out to their consumers.

Greater focus on value rather than volume moving ahead

Despite the optimistic growth prospects for beer volume consumption in Southeast Asia, greater taste sophistication and higher disposable income could mean a shift in emphasis from quantity to quality of beer. Beer players will need to consistently reinvent themselves to stay relevant—new sophisticated flavours, craft beer and perhaps new channels to reach out to their consumers.

Contributed by: Jarred Neubronner, Analyst at Euromonitor International.

Further reading:

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