Warning: Use of undefined constant style - assumed 'style' (this will throw an Error in a future version of PHP) in /home/customer/www/boozenews.com/public_html/wp-content/themes/boozenews/functions.php on line 244

The global beer industry: Brewers need to up their marketing

on 10/05/11 at 10:23 am


To maintain profit growth, brewers will need keen marketing.

MASS-MARKET beers taste like soapy water. Or so many real-ale snobs insist. So it is hardly surprising that they are now being marketed like soap powder.

People in rich countries are not drinking enough beer. By volume, sales in 2010 fell by 1.5% in America and 2.3% in western Europe, says Nomura, a Japanese bank. Only “craft” ales from small independent breweries did well, rising by 11% in America. Wealthier drinkers quite like these exclusive brews but have, overall, gone off their beer in favour of wine and spirits.

Until recently big brewers tried to make up for flagging sales in the rich world by pushing into emerging markets. Over the past decade they have bought or merged with local brewers, thereby gaining access to their all-important distribution chains. A $52 billion tie-up in 2008 between Anheuser-Busch, the American brewer of Budweiser, and InBev, a Brazilian-Belgian firm, saved a fortune. Cost-cutting through mergers will have boosted global brewers’ profits by $3 billion over the five years to 2012, estimates Credit Suisse, a bank.

But although consumption per mouth in poorer countries has far to go to catch up with the West (see chart), growth is set to slow, predicts Nomura. Worse still, emerging markets are not nearly as profitable as rich ones. Anheuser-Busch InBev (ABI), now the global leader, sold a third of its beer in North America in 2010 yet reaped 46% of its profits there.

So the “big four” brewers (which control about half of the global beer market) need to look at home for future profits. The trouble is, boozers in rich countries are increasingly drinking at home. In Britain, for example, about half of all beer is bought for swilling on the sofa. By 2018, thinks Molson Coors, a Canadian brewer, as much as 70% could be. Since the margins in supermarkets are thinner than those in bars, that spells trouble for brewers.

{Full story via The Economist}

Enhanced by Zemanta