Drafted in 1516, it states that beer can only be made with four items: malted barley, hops, water and yeast. Germany, which is home to the world’s oldest active brewery, was also slow to embrace the craft beer trend, due to the combination of a saturated local producer base and the country’s “Deutsches Reinheitsgebot,” or purity law. In 2014, there were twice as many new beer products in the UK as in 2013. While consumers in the UK have been slower to catch onto this trend, they began making up for lost time last year. In Italy, there were eight times more new beer products on retailers’ shelves in 2012 than in 2007 in the Czech Republic, there was a 5x increase, in Spain a 4x increase and in France 3x. 1 This trend is also occurring in Europe. In an environment where overall beer production rose just 0.5 percent in 2014, output from small brewers surged by 18 percent, giving them an 11 percent volume share of the $100 billion beer market. In the U.S., craft brewers are now officially beating the big beer makers. The fact that economies of scale are less important in these profitable sectors makes it easier for niche providers to compete successfully.Īll along the value chain, product innovation has increased rapidly. Competitive pressure has intensified dramatically in the premium and super premium segments, which have experienced strong growth and retained attractive profit margins.
Too little volume, too many productsīreweries are not only battling volume issues. Although there have been exceptional growth rates and volume increases in many emerging markets in recent years, this is little consolation for large international brands, since the majority of these markets are dominated by local brewers. Reasons for this collapse include demographic changes, the emergence of alternative beverage categories like wine, cider and health-oriented drinks, tighter regulatory and taxation measures, as well as the continuing global economic slowdown. The per capita consumption by Germans, who are some of the world’s biggest lovers of beer, has dropped by one-third since 1976. In other key markets such as Germany, France and the UK, they fell by roughly 10 percent over the same period. In the U.S., beer’s largest market, production volumes stagnated between 20. Trends in the world’s major beer markets are clear. This confluence of challenging developments is not merely creating temporary roadblocks for large beer manufacturers – it marks the beginning of a difficult era for the entire industry. All at once, there is falling consumer demand, increasingly competitive products, heightened requirements by retailers and consumers, and tougher market access. The global beer industry faces its greatest challenge in 50 years.
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