Covid-19 hangover: UAE alcohol market set to see slump as tourism takes a hit

By Guan Yu Lim

- Last updated on GMT

On average, UAE consumers drank 3.8 litres of alcohol per person annually, the highest in Middle East ©Getty Images
On average, UAE consumers drank 3.8 litres of alcohol per person annually, the highest in Middle East ©Getty Images

Related tags Uae Alcohol ecommerce COVID-19

Alcohol consumption in UAE is expected to continue to decline, a trend which began last year and accelerated with the ongoing Covid-19 crisis, according to new research.

Last year, overall alcohol sales volume in UAE fell to 128.79 million liters, down 3.5% from 2018’s 133.42 million litres, Euromonitor reported.

Now IWSR drinks market analysis is forecasting a single digit decline across all alcohol sectors in UAE (Dubai, Abu Dhabi, Northern Emirates) until 2024.

The spirits sector is expected to drop 7.6% in volume. Beer and wine volumes are estimated to decrease by 1.1% and 1.3% respectively.

According to the World Health Organization, spirits (82%) were the most popular alcohol in UAE, followed by beer (10%) and wine (8%).

ISWR said losses due to the closure of on-trade channels and travel retail are expected to result in double digit declines for the global alcohol consumption this year.

UAE market

According to the WHO’s Global Status Report on Alcohol and Health in 2018, UAE consumers drank an average of 3.8 litres of alcohol per person annually.

In the region where alcohol is mostly prohibited due to religious sensitivity, consumption in other Middle Eastern countries range from zero in Kuwait, to two litres in Qatar. This makes UAE’s consumption the highest in the region.

Alcohol growth is mostly contributed by tourism and its huge expatriate population. Emiratis make up 10% of the population, while expatriates accounted for the remaining 90%.

Burak Aslan, sales manager of APAC and MEA at Japanese premium alcohol distributor, Yoshino Spirits told us alcohol consumption in UAE was driven by multiple factors: “Apart from local consumers, Middle East offer a variety of touristic destinations attracting millions of tourists every year. In addition, there is a significant expat population in multiple countries across the region that further triggers alcoholic beverage consumption.”

According to a market survey conducted last month by Flanders Investment and Trade, UAE was the world’s busiest hub for international passengers for six consecutive years.

The surge in tourism, increase in number of expats living in the region and developing economies help increase local incomes, and the ability to afford alcohol​,” Aslan added.

In UAE, the majority of alcohol sales is through on and off trade channels, followed by travel retail. There is no production of alcoholic drinks in the UAE, hence all brands are imported.

Mark Meek, CEO of IWSR Drinks Market Analysis said: “While we’re still assessing the full impact of the current Covid-19 situation, it’s very clear that the pandemic is set to cause a deeper and more long-lasting after-effect to the global drinks industry than anything we’ve experienced before. Even the downturn following the 2008 financial crisis was less severe than what we are seeing now​.”

He said a strong focus on innovation, premiumisation, and e-commerce could help contribute to the industry’s rebound and future growth.

In e-commerce, IWSR said in its global market report that all beverage alcohol categories in 2019 grew in value faster online versus the total market.

In addition, IWSR said the value of alcohol e-commerce in 2019 was worth US$21bn (in 10 key markets - Australia, Brazil, China, France, Germany, Italy, Japan, Spain, UK and the USA), which it claimed was almost twice that of global travel retail, pre-Covid-19.

In the UAE, the two largest premium liquor distributors, Maritime and Mercantile International (MMI), and African + Eastern recently launched the first home delivery service wines, spirits and beers in Dubai.

The service called is available to all Dubai residents over 21, and non-Muslims who hold a valid liquor licence, as well as tourists.

There are currently 500 over brands on this service.

Shortly after, Spinneys Liquor, part of the MMI group also launched its own home delivery service for wine, beer and spirits in Abu Dhabi.

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