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Beer
goes from strength to strength
- 25 Jun 2004
Author: Natasha Cazin The
beer industry remains in fairly good shape, with volume sales up by 2.2% in 2003.
Growth is mainly being driven by the increasing importance of developing markets,
such as China and Russia, underpinned by increasing disposable incomes, rising
living standards and greater levels of foreign investment, mainly in the form
of strategic alliances with local manufacturers. Indeed, China has now overtaken
the US as the world’s largest beer market, with total volume sales increasing
by 41% over the review period. In
the mature regional markets of Australasia, North America and Western Europe,
as well as parts of Asia-Pacific, brewers have been struggling to achieve volume
growth. This is due to a combination of weakened consumer confidence (particularly
in the US and Japan) and changing consumption habits, particularly amongst younger
consumers, who are increasing opting for alternative drinks, such as FABs, over
traditional lagers and dark beers. Most of the major breweries are therefore placing
an increased focus on premium beers, making them more visible and more widely
available in both retail and on-trade channels. Imports
on the up
In
the UK, for example, 2003 saw the demise of Heineken Cold Filtered to be replaced
by a 5% abv genuinely imported version. Scottish & Newcastle also announced
its intention to cease production of several of its economy lager brands, including
Hofmeister and Kestral Pilsner, as well as its McEwan’s standard lager and
Courage Light standard ale brands, in order to focus on the premium segment of
the market. In
the US meanwhile, premium imported lagers such as Corona Extra and Heineken continued
to perform strongly in 2003, despite the recent economic downturn. Light
beers carry weight
Another
underlying trend in the beer market over the 1998/2003 period was the rise of
"light beers". This tendency was particularly pronounced in the US,
where Bud Light was the best-selling beer in 2002, having supplanted its older
sibling, Budweiser, in the previous year. Many
US consumers continue to eschew full-calorie beers for their reduced calorie counterparts
in an effort to control their waistlines. The latest idea is to reinvent light
beers as "low-carbohydrate" beers, with Michelob Ultra leading the way.
Another developing
trend is the increase in niche and speciality beers. These essentially are the
products of microbreweries with the emphasis on the use of natural ingredients
and traditional brewing techniques, and the absence of chemicals associated with
large-scale production. Amongst speciality brews, wheat beers were one of the
fastest growing product types in 2003, albeit from a very small base. Consolidation
continues apace
The
global brewing industry has been going through a period of unprecedented change
in recent years, with a burst of corporate activity in 2003. The acquisitions
of BBAG by Heineken, Birra Peroni by SABMiller and Gabriel Sedlmayr Spaten-Franziskaner
Bräu KGaA (Spaten) by Interbrew have highlighted the apparent urgency of
the leading players to build scale in order to remain competitive. The
most recent shake-up occurred in March 2004 when Interbrew announced that it had
agreed to merge with South American brewing giant AmBev. The combined entity will
be the largest brewing company in the world by volume, displacing Anheuser-Busch.
The merger represents a good geographic fit, as AmBev is very well placed throughout
South America and is beginning to position itself in the Caribbean, while Interbrew
is strong in European and North American markets - especially in Canada and Mexico
- and in Asia. In
terms of brands, Budweiser remains the world’s biggest, followed by Bud Light
and Skol. Of these, Bud Light was the only one to gain share in 2002, thanks to
its superior brand equity, marketing and wholesaler execution. Indeed, the brand
may well overtake Budweiser to become the leading global beer. | 
