Singapore is one of the world’s strongest economies and a highly-developed nation in Southeast Asia. It is included in the 2018 world’s most expensive city to live in and it is an even more expensive city if we talk about to drink in. As the Singaporean economy is constantly growing and the spending of the consumers increasing, the Singaporean consumers are now likely to trade up to premium offerings more rather than mainstream or value wine products. According to market research on the alcohol industry, we found that it is one of the lucrative places to do business in Singapore.
Market Size of the Alcohol Industry:
Singapore’s economic growth was the fastest in almost 4 years, which was 5.2% in Q3 2017. The unemployment rate of Singapore slipped 0.1% from the beginning of the year and seen 2.1% down in September 2017. The strong economic growth of Singapore is leading an influential wine products demand, especially for premium wine. So, collecting vintage wines is the growing trend and it is serving a major part in the growth of the sector. International winemakers targeting to grasp the opportunity to lead the Singaporean alcohol industry because of the domestic winemakers in the nation are lacking. The foreign wine producers introducing the best luxury premium wine offerings into the market.
Singaporean alcohol industry is competitive. The alcoholic retailers are striving for the attention of the places where people regularly sit over glasses of wine, such as the growing number of restaurants, bars hotels and other venues, etc. Singaporean wine market is expected to grow 5.1% according to the compound annual growth rate (CAGR) over the period 2016–2021 and is expected to reach the market value of US$1.4bn by 2021.
It is expected that in between 2016 and 2021, the still wine category to increase at a CAGR of 5.2%, whereas the sparkling wine category will rise at a CAGR of 5.1% in Singapore. The growth of the wine industry is principally associated with the growing affinity towards the import of premium wine products from Australia, France and Chile and the other major reason is the rapid growth of the economy and high disposable incomes of the consumers in Singapore.
Drinking Culture of Singapore:
In Singapore, people want a quick bite place to eat at a reasonable price, so the hawker centres rule the perch among those peoples. Beer lover peoples enjoy pubs, bars and cafes more rather than food courts in Western malls. Despite the heavy excise taxes on alcohol, Tiger beer is ruling in Singapore to enjoy a vibrant nightlife there. Singapore consists of four types of people there Chinese, Malay, Indian and other. Religions include Buddhism, Christianity, Islam, Taoism, Hinduism, amongst others, whereas a large number of Muslim population in the country levies ‘sin taxes’ on alcoholic products and it is the main reason of the limited growth of the wine market in the country.
In Singapore beer is consumed more as the excise tax on beer is less in comparison to wine. The excise tax on liquor is levied according to the litre of the liquor, so the wine is the most expensive as the tax is levied more on the bottle. Whereas, on beer, the excise tax is low according to the weight of the can, bottle, etc. People’s in Singapore now prefers red wine more and they prefer it if it is imported one. People trust imported liquor more rather than home-made liquor. The name of an international brand on the bottle of liquor attracts more consumers in Singapore.
Singapore levies high taxes on alcohol and getting a permit and entering the market is a time-consuming process. Despite the challenges, it is a good market to target. Peoples in Singapore have a high disposable income and the good thing is that people are willing to spend the part of their income on alcohol. Duties and taxes are very high depending on the alcoholic strength and additionally 7% GST also charged on the alcoholic products other than duties and tax.
Duties Payable = Total Quantity in Litres x Customs and/or Excise Duty Rate x Percentage of Alcoholic Strength
Breweries in Singapore:
Breweries in Singapore are trying to give an Asian twist to the European-style beer. People who love craft beer easily gets the beer from non-specialist bars and alcohol delivery services oftentimes stock a couple of unique brews that you won’t find at most supermarkets in Singapore. While most of the craft beer is from American and British craft beers instead of Singaporean craft beer, but some Singaporean craft beer crafting some particularly interesting brews of their own. Singapore has the potential to have more breweries as the other countries already have. The people in Singapore prefer imported liquor irrespective of their cost and taste rather than their own home brand liquor.
Singapore is a technology-oriented country and easily adaptable to the tech. Still, do not have the trend to make own home brand liquor. This is only because of having the Islamic population more and it is the only reason why the liquor in this country is much costlier than in other countries. Sin-tax is levied on the import of the liquor. Whereas, if the country produces their own home brand liquor than it will cost cheaper than the imported one.
Online Retailer: The Game Changer:
Online retailers are growing fastidious in the alcohol industry as the people want to get these products delivered right at their doorsteps. The alcohol industry is the quickly spreading with the internet retailing, now consumers are more knowledgeable about the wine and reducing the need to go to the brick-and-mortar stores to buy the product when it is easily available at convenience. Two startups Vinomofo and Dellarosa Wines enter the wine retailers industry and start selling their bottles online, filling in logistics gaps, and rousing the beverage scene in Singapore. Both the startup’s founded in Singapore because the founders noticed that huge logistics costs applied on small wine bottles and a lot of middlemen are in between the producers of wine and consumer.
- Vinomofo: Australian company expanded to Singapore in December 2016 founded by Justin Dry to attract the younger audience of Singapore. Prior to this, he set up Quaff, a social network for wines and this helped him in setting up the Vinomofo, gauging the tastes of Australia’s wine scene in Singapore. The startup is focussed on wine selection according to the member’s personalising.
“Challenges plague the process of delivery because wine bottles are generally heavy, fragile, perishable, and bounded by the law. The environment should also be maintained because wines need to travel at a steady temperature. “It can’t have too much fluctuation. So there are a whole lot of things that go into making sure that the wine is looked after, and we probably couldn’t have chosen a more difficult product to deliver,” said Justin Dry.
- Dellarosa: dellarosa.com founded in November 2017 by Quintin Dellarosa. It is the newest online service with a goal of exporting organic, biodynamic, natural wines, rarity, and exclusivity products made by artisanal winemakers to Singapore. It doesn’t require any membership to buy wines, as Vinomofo required. After a few months of experience, they discovered the admirer of the wines are increasing and willing to taste wines with complex aromas.
“Since the word is spreading, people are willing to try more types of wine. The online market space enables us to interact directly and immediately with consumers without barriers. We want to deliver and discuss the entire tradition, cultural trait, and flavour of each wine we selected from winegrowing areas,” said Quintin Dellarosa.
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