beer industry

Topics: Beer, Brewing, InBev Pages: 27 (1511 words) Published: February 6, 2014
Global forces and the European brewing industry
Mike Blee and Richard Whittington

This case is centred on the European brewing industry
and examines how the increasingly competitive
pressure of operating within global markets is causing
consolidation

through acquisitions,

alliances and

c/osures within the industry. This has resulted in the
growth of the brewers' reliance upon super brands.
ln the first decade of the twenty-first

century,

European brewers faced a surprising paradox. The
traditional

centre of the beer industry worldwide,

and

still the largest regional market, Europe, was turning
off beer. Beer consumption

was falling in the largest

markets of Germany and the United Kingdom, while
burgeoning

in emerging markets around the world.

China, with 7 per cent annual growth, had become
the largest single market by volume, while Brazilian
volumes had overtaken Germany in 2005
(Euromonitor,

2006).

Table 1 details the overall decline of European beer
consumption.

Decline in traditional

to several factors. Governments

key markets is due

such as Tesco or Carrefour, which often use eut-priee
offers on beer in order to lure people into their shops.

are campaigning

strongly against drunken driving, affecting the

More th an one-fifth of beer volume is now sold

propensity

through supermarkets.

to drink beer in restaurants,

pubs and

German retailers such as

bars. There is increasing awareness of the effects of

Aldi and Lidl have had considerable

alcohol on health and fitness. Particularly ln the United

their own 'private-Iabel'

Kingdom, there is growing hostility towards so-called

beers. However, although on-trade volumes are fallin_

'binge drinking',

in Europe, the sales values are rising, as brewers

excessive alcohol consumption

in

pubs and clubs. Wines have also become increasingly

introduce higher-priced

success with

(rather th an brewery-branded

premium products such

popular in Northern European markets. However,

as extra-cold

beer consumption

other hand, a good deal of this increasing demand

per capita varies wic;lely between

lagers or fruit-flavoured

beers. On the

countries, being four times higher in Germany than

for premium products is being satisfied by the

in Italy, for example. Some traditionally

import of apparently exotic beers from overseas

consumption

low-

European markets have been

(see Table 2).

showing good growth.

Brewers' main purchasing

The drive against drunken driving and binge

(accounting

costs are packaging

for around half of non-labour

costs), ra

drinking has helped shift sales from the 'on-trade'

material such as barley, and energy. The European

(beer consumed on the premises, as in pubs or

packaging

restaurants) to the off-trade (retail). Worldwide,

the

industry is highly concentrated,

by international

companies

off-trade increased from 63 per cent of volume in

and Owens-Illinois

2000 to 66 per cent in 2005. The off-trade is

Dutch brewer Heineken complained

increasingly dominated

by large supermarket

chains

dominat

such as Crown in cans

in glass bottles. During 2006,

rise in packaging costs.

of an 11 per c

GLOBAL

FORCES

AND THE EUROPEAN

BREWIN

"(JY

European beer consumption by country and year (000 hectolitres) 1980

2001

2000

2002

2003

\~

2004

7651

8627

8734

8979

8881

8970

12945

10064
5452
4024

9703

5202
4136
20629
100385
4247
5536

9935
5181
4179

21420
103105
4288
5594

9986
5282
4085
21331
100904
4181
5625

9901

NIA
NIA
NIA
NIA

4174
9539
417

-

8762

16289
472

16694
445

16340
440

12213
7651
3534
20065
3935

13129
2327
6453
29151
5011
4194
57007

12922
2290
6276
31126
4932

11985
2420
5948...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay on Pestel Factor Affecting the Brewing Industry
  • Global Forces and the European Brewing Industry Essay
  • The United States Beer Industry Essay
  • CASE The United States Beer Industry Essay
  • Essay about Trends and Issues in Beer Industry
  • The United States Beer Industry Essay
  • The Global Beer Industry Essay
  • Beer Industry Case Study Essay

Become a StudyMode Member

Sign Up - It's Free