Globally, beer (not including flavoured malt beverages, such as hard seltzers) grew 0.3% in volume and +2.2% in value in 2019, led particularly by increases in non-alcoholic beer (+15.2% in volume, vs. 2018). Though the beer category has taken a hit in 2020, in total, beer is expected to reach 2019 volumes by 2024, rebounding better than wine and spirits. The category’s resilience will likely be driven by five key factors:
Investment in developing markets will yield dividends
As developed beer markets have stagnated in recent years, key players within the beer category have identified and invested heavily in increasing their brewing capacity and in developing their sales channels across developing markets. This investment will begin to yield dividends as the recovery process from Covid-19 gains momentum.
Africa has been a particular focal point for investment, and the IWSR expect beer sales to rise by 11% on 2019 levels by 2024. Mozambique, Kenya and Ethiopia have all seen new breweries come on stream in the last few years, and are projected to see growth ranging from 28% to 36% in the next five years.
In Asia, Heineken and Carlsberg have been very active in Vietnam and Cambodia. Last year, Heineken enjoyed success with the launch of Heineken Silver in Vietnam, while Carlsberg’s relaunch of Huda was also well received. Of the leading markets, the IWSR project these two countries to be in the top ten growth markets between 2019 and 2024.
With its compatible climate and the fact that spirits still outsell beer, the potential for beer growth in India is on the radar of brewers as well. AB-InBev, for example, began brewing Budweiser in the market back in 2010, and announced one of its biggest investments in India in 2019. The IWSR anticipates Indian beer consumption to rise by 5% in the next five years.
Non-alcoholic beer will continue to grow
Until relatively recently, no-alcohol beer was often seen as a distress purchase, but improving taste, innovation, substantial marketing support and widening availability, helped sales to jump by 15% globally last year. The segment is a good fit with the contemporary consumer, and is predicted to expand by nearly 50% over the next five years.
An increasingly health-conscious consumer is being catered for by a growing range of products that provide a genuine alternative to full strength products. This will mean that drinkers wanting to abstain from alcoholic drinks do not need to leave the sector altogether, but can continue to drink beer.
Craft brewers will re-emerge
Over the last decade, the craft revolution in beer did much to raise the profile of the beer category, bringing new ideas, innovation and premiumisation to the sector. The high reliance of these artisanal producers on the on-premise has, however, made them particularly susceptible to the impact of Covid-19. Many of them may not survive in the coming months. However, the consumer’s appetite to explore and experiment is unlikely to diminish post Covid-19, and when the green shoots of recovery do emerge, we can expect a new generation of craft players to appear as well, replacing those that did not make it through. These new-age craft players will play an important role in the rehabilitation of the global beer sector.
Ecommerce will provide a lifeline
To the existing craft players that do survive, ecommerce will have provided the lifeline. Even before Covid-19, ecommerce value sales of beer increased by 13% globally in 2019. Now, the lockdown has made online shopping the norm for large swathes of consumers in markets across the globe, and we will likely see a surge in volumes through this channel in 2020. As an antidote to the pandemic, players in the industry are revamping their online capabilities, upgrading their online shops and partnering with digital sales platforms. This will help to offset any sluggish recovery of the on-trade channel and allow the sector to reach out to increasingly more drinkers.
Women will drink more beer
A notable bias towards men continues to exist among beer drinkers. However, in recent times, helped in part by the craft movement, the sector has become a broad church of tastes, styles and flavours. As a result, beer’s appeal has increased to a wider, and often more female, audience. Added to this, the lower ABV level of beer could resonate with women looking to migrate from stronger alternatives like wine and spirits. Marketing and glassware should help to facilitate this as well.
You may also be interested in reading:
- Irish Whiskey
- Mixed Drinks
- US Whiskey