Fizzing out: why are global beer sales down?
With reports showing that global beer popularity is falling and drinking habits are changing, Elliot Gardner looks into whether the beer industry should be worried.
Drinking habits are changing on an international scale. At the beginning of June an International Wine and Spirits Record (IWSR) report found that the sale of all alcoholic drinks fell by 1.3% in 2016, but perhaps more shocking was the 1.8% drop in global beer sales.
And now the news in the UK, according to a Harris Interactive study for The Grocer, is that the British public is changing its attitude towards drink, with 41% of Britons claiming that they are trying to cut down on the amount of alcohol they drink, with the 25-34 age range being the bracket most likely to claim they are limiting their intake. Do beer manufacturers and retailers need to be concerned about this shift in drinking habits?
Staying in or going out?
GlobalData reports show that this drop is nothing new within the beer and cider sector, with evidence of falling global beer volumes being demonstrated as far back as 2015. In contrast to the figures, information from GlobalData suggests that some western markets are actually returning to a period of growth after a slowdown over the past few years.
Global beer and cider research manager for GlobalData Kevin Baker explains that the global figures are skewed by changes in just three key markets. “The fall in volume is driven almost entirely by China, Russia and Brazil, rather than being indicative of a general slowdown in beer growth globally…the slowdown in the three markets highlighted is entirely due to economic issues, exacerbated in the case of Russia by draconian taxation changes and hostile government policies towards the beer category.”
However despite these reassurances, there is definite evidence of a shift in opinion. The indication from the Harris Interactive study is that while negative media messages surrounding alcohol are, in the UK at least, impacting the public’s drinking habits, the reality is in fact a change in habits, with more drinkers choosing to drink at home rather than in pubs and restaurants. This coincides with a shift towards the purchase of more premium alcohol in smaller quantities, rather than a large volume of cheap beers, which will certainly have an impact on the wider industry.
“Whilst changing consumption habits, a move from drinking out to drinking at home, a decline in session drinking, stricter drink-driving limits and increasing health concerns all have an impact on beer volumes, at the end of the day, it is consumer spending power that is the primary driver of consumption,” says Baker.
The continued craft revolution
“There is a lot of truth in the cliché that people are ‘drinking less but drinking better’,” Baker states, referencing the continued success of craft beer products internationally. Despite some claims, such as those made by Anheuser-Busch Inbev NV last year that the craft phenomenon is slowing down, the case is in fact that premium, superpremium and speciality beers (including craft), are outperforming mainstream beers in terms of growth in almost every market and region.
Scottish craft beer giant Brewdog is a prime example. In stark contrast to the international statistics claiming a drop in beer volumes, Brewdog’s UK sales rose by 97% last year, and in 2016 internationally the brand shipped 65 million bottles of beer worldwide.
Perhaps the biggest indicator of the brand’s success is its planned expansion into Asian markets, namely China, despite the dramatic fall in beer’s popularity in the country. “China is on course to be one of our biggest export markets in 2017 and we also have significant distribution in Japan and South Korea,” commented co-founder James Watt. Despite sales volumes falling, China is still one of the largest beer markets in terms of bottles sold, and if the popular craft brand can crack the market, it certainly has the possibility of reinvigorating the marketplace, at least for itself.