Exporting Alcohol to Taiwan: an Introduction
This is the second article in our four-part series on the advantages and disadvantages of selling alcohol in each of the Greater China markets—Mainland China, Hong Kong, Macau, and Taiwan. The focus is on the importation, sales, and promotion of foreign alcoholic products. In this article, we will discuss the rapidly maturing market–Taiwan.
Advantages of Exporting Alcohol to Taiwan
High growth potential
Although Taiwan has a relatively small and homogenous market of 23 million people, it is highly attractive for foreign companies. The consumers’ high purchasing power and significant spending patterns offer huge opportunities to those offering imported products. Location wise, Taiwan’s geographical position is the perfect platform for exporters looking to break into the Asia-Pacific region.
In terms of alcohol imports, Taiwan is one of the world’s fastest-growing markets in the world. Over the years, consumers there have developed a taste for premium and imported alcoholic beverages. Shipments of foreign wine and spirits to the country show stable growth, reaching US$837 million in 2016. Wine consumption is at 20.2 million liters while beer import in 2016 reached 188 million liters (US$185 million).
Low barriers to entry
Most new-to-market alcohol exporters find it relatively easy to enter Taiwan. Local representative offices and foreign chambers of commerce are eager to help foreign companies gain an initial foothold in the market. This is extremely favorable for many firms as there is also the added benefit of using these local partnerships to gain access to the larger China market.
Typically, companies start by securing a local partner who will serve as a representative or a distributor for their business. They also provide assistance in obtaining the necessary certifications and permits required for importation, distribution, and sale. It also helps that there are no foreign exchange regulations that may hamper an exporter from receiving payment for goods shipped.
Higher familiarity with imported alcohol
Taiwan is a sophisticated market in which consumers are quite knowledgeable about global trends. Seasoned exporters have learned to adjust their product range to meet the preferences of different consumers. Brandy and whisky producers have found a stable market among older and wealthy male consumers. Their appetite for high-end single malt whisky continues to fuel growth in imported alcohols.
Meanwhile, the considerable rise of young urban dwellers and white-collar workers in the country has paved the way for increased consumption of wine. While red wines are becoming popular in the market, semi-sweet white wine remains the best choice among female drinkers. There is also heightened interest in craft beer, particularly among young adults.
Disadvantages of Exporting Alcohol to Taiwan
Rapidly maturing market
One disadvantage for companies entering the Taiwan alcohol market is high cost. Due to the country’s mature economy and robust trade relations, the market is already dominated by a number of established companies, both local and foreign. This means that consumers already have established buying habits.
For brands lacking awareness among the consumers, breaking into the market is difficult as brand loyalty is strong in the market. Consumers must feel something distinct in the new products being offered in the market before taking the plunge. To lure potential clients away, companies must invest heavily in product research and development, as well as marketing and promotion.
Highly competitive market
As the hub linking developed Western economies and emerging Asian markets, Taiwan’s consumer market is accessible and well-regulated. Foreign products are well represented in the market. Prices of imported alcohol are reasonable. Competition is stiff, posing a challenge for many companies.
The increased alcohol consumption in Taiwan is mainly due to easy access to alcohol. Sales are available 24/7. The distribution network is dense and characterized by a strong presence of convenience stores. In 2017, it was the most important off-trade channel for alcohol players. A wide array of imported brands is offered by retailers like Costco and Carrefour.
Closing Thoughts on Exporting Alcohol to Taiwan
While ease of entry and high growth potential make Taiwan attractive to foreign businesses, breaking into such a mature and highly competitive market can be tricky. Companies must carefully consider their resources, as well as long-term and short-term goals, to determine if this market is the right choice for them. Otherwise, one of the other Greater China markets may be the better option for where and how to develop their business.