The growing health and wellness trend has accelerated the demand for ready-to-drink (RTD) cocktails as they are low on alcohol content by volume. With the impact of COVID-19 waning, the sales of premium products are on the rise, thereby motivating multinational brands to launch premium offerings. Thus, the Malaysian spirits market is projected to grow from MYR1.9bn ($458.1m) in 2021 to MYR2.6bn ($647.2m) in 2026, at a compound annual growth rate (CAGR) of 6.9% during 2021-2026, forecasts GlobalData, a leading data and analytics company.

GlobalData’s report, ‘Malaysia Spirits Market Size by Categories, Distribution Channel, Market Share and Forecast, 2021-2026’, reveals that the market growth will be primarily driven by the tequila & mezcal category, which is set to register the fastest value CAGR of 8.4% over 2021-2026. The category will be trailed by the gin & genever category, which will record a CAGR of 8.4% over the forecast period.

‘Hypermarkets & supermarkets’ was the leading distribution channel in the Malaysian spirits market in 2021, followed by ‘food & drinks’ specialists.

Siddhartha Rodrigues, Consumer Analyst at GlobalData, says: “With the easing of restrictions on public outdoor mobility, social gatherings, mass public events, and tourism activities will resume. As restaurants, bars, pubs, nightclubs, lounges, and other ‘on-premise’ venues commence full-fledged operations, on-trade demand for spirits will rebound in 2022.

“However, the threat of a further hike in sin tax looms as the government looks for ways to reduce alcohol consumption and raise tax revenues. As alcohol taxes in Malaysia are already among the highest globally, a further hike in excise duty on liquor will inadvertently spur sales of illicit liquor. This would further slow the post-COVID-19 recovery of manufacturers, retailers and foodservice operators.”

​Bozeman Spirits, Lucas Bols, and Diageo were the top three companies in the Malaysian spirits market by value in 2020, and Bobcat and The Macallan​ were the leading brands.

The per capita expenditure (PCE) of spirits in Malaysia increased from $18.1 in 2016 to $19.2 in 2021, which was far lower than the global average ($150.7) and the regional level ($138.7) in 2021. The PCE on spirits in Malaysia is expected to reach $27.1 in 2026.

Rodrigues concludes: “As the pandemic impact subsides, and economic conditions improve, the revival in consumer confidence will boost the spending on alcoholic drinks. This will encourage consumers to experiment more with new flavors and mixes of spirits and pay more for premium consumption experiences. New product launches and accompanying marketing activities will accelerate the demand for both white and brown spirits.”