Global Marketing Management
Global Marketing Management MKT 568
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BEER IN LATIN AMERICA BEER LATIN AMERICA Market Overview Introduction This report analyses the market for beer in Latin America For the purposes of the study the market has been divided into four sectors Lager Dark beer Stout Nonlow alcohol beer Much of the information in this report is of a statistical nature and whilst every attempt has been made to ensure accuracy and reliability Euromonitor cannot be held responsible for omissions or errors T e forecasts given are estimates based on the state of the market at the time of writing and the most reliable sources of information available Figures in tables are calculated from unrounded data and may not sum xxx BEER IN LATIN AMERICA BEER LATIN AMERICA Market Overview Main Findings The beer market in Latin America performed poorly in 2007 affected by the Brazilian currency crisis and associated loss in consumer confidence across the region Wider availability of products stimulated demand among middle and high income consumers during the review period and these consumers remain the ones more likely to experiment wit products other than lager Total beer sales in Latin America amounted to 23 billion litres in 2007 marginally down over the previous year In value terms the regional beer market was worth around US40 billion in the same year down 7 over the previous year Brazil continued to generate the greatest volume sales in Latin America due to its large population and an established tradition of beer drinking Brazil however was also one of the worst performing national markets in 2007 with a substantial fall in sales of standard lager by far the most popular type of beer in the country Colombia saw the most dynamic growth over the 2003 2007 period with sales increasing by around 11 in both volume and local currency constant value terms in 2007 The unstable political situation in Colombia was exacerbated by the financial crisis across the region which impacted on consumer confidence reducing expenditure on more expensive alcoholic drinks in favour of beer Lager dominated the beer market in Latin America underpinned by the popularity of standard lager across all national markets in the region The reason for lager39s popularity is to be found in the fact it is more suited to the generally hot climate which prevails across most of Latin America as well as being t e type of beer typically favoured by southern Europeans whose descendants populate the region Dark beer was the best performing sector in 2007 although progress was from a very low base Dark beer remains largely a novelty drink in Latin America and it tends to be drunk by better off consumers in horeca outlets who are prepared to experiment Similar to what is the case in Asia Pacific glass is the most popular packaging format throughout the region as lager is traditionally sold in bottles across Latin America Generally low levels of disposable income in real terms means that the majority of consumers follow the tradition of using returnable glass bottles in many of the major markets across the re ion AmBev was the leader of the regional market in 2007 commanding a volume share of around 29 The company was formed after the merger of Brahma and Antarctica in Brazil in 2007 As a result AmBev became the dominant brewer in the region and one of the biggest in the world quotOther food storesquot continued to be the most important format for the retail distribution of beer across Latin America accounting for over 46 of retail sales in 2007 However supermarketshypermarkets experienced the most robust growth during the review period largely at the expense of quotother food storesquot with consumers increasingly attracted by the variety of products and competitive pricing characteristic of supermarkets Euromonitor forecasts that the beer market in Latin America will grow by nearly 5 in volume compound annual growth rate CAGR terms between 2007 and 2013 with strong performances from newer products such as stout and dark beer although the most important 1 influence by far will remain lager Real value growth will be lower however mainly due to intensifying competition between brewers as well as retailers BEER IN LATIN AMERICA Market Background Taxation Most countries levied lower levels of tax on beer in comparison to spirits which reflects governments39 more relaxed attitude towards drinks with a lower alcohol content In Brazil TPT is a federal tax levied on domestic and imported alcoholic drinks Rates vary according to the category of the alcoholic drink On beer the rate is 80 Merchandise and Service Circulation Tax TCMS is the state39s value added tax applicable to both imports and domestic products TCMS varies from state to state in Brazil For example in Slt176gto Paulo the rate is 25 Mexican import duties on alcoholic drinks currently stand at 20 ad valorem additionally there is a customs handling charge of around 1 Excise taxes on beer are currently 25 although the rate levied on spirits is 60 TEPS Tmpuesto Especial sobre Productos y Servicios Special Product and Service Tax rates stood at 22 for drinks up to 14 ABV 30 for drinks between 14 20 and 45 for drinks in excess of 20 Alcoholic drinks were also subject to a VAT rate of 15 Under the provisions of NAFTA tariffs on beer are being progressively phased out dropping to zero by 2006 This is significant given the importance of the US market for high profile Mexican brands such as Corona Tn Venezuela on 1 June 2007 the former luxury goods tax of 165 was substituted by a 155 valued added tax TVA Beer production in Venezuela is controlled by the government Argentina significantly reduced excise taxes on alcoholic drinks in 1993 in an effort to break the downward trend in formal sector sales and a concomitant increase in sales to black marketers know as contrabandistas who undercut official products Beer is exempt from excise taxes while import duties are the same for wines with varying levels depending on the country of origin especially if they are sourced on Mercosur purchases The only significant tax increase was a value added tax hike from 18 to 21 in 1995 This increase however was not in every instance reflected by price increases at the point of purchase In an intensely competitive environment many manufacturers chose to absorb this 3 increment rather than transfer it on to consumers Table 1 Sales TaxVAT on Beer by Country 2007 o0 2007 Brazil 25 0 Chile 22 0 Argentina 21 0 Venezuela 15 5 Colombia 15 0 Mexico 150 Source Euromonitor from Official Statistics BEER IN LATIN AMERICA BEER LATIN AMERICA Market Background Legislation The production of alcoholic drinks is closely regulated in most countries with strict legislation governing the retailing of alcoholic drinks as well as advertising and consumption Nevertheless the legislation governing the beer industry is relatively relaxed compared with spirits Brazil introduced a number of new restrictions designed to reduce alcohol related driving accidents in 2007 The most notable one was to prohibit the sales of alcoholic drinks at petrol stations in Rio de Janeiro The sale of alcoholic drinks on highways in the state of Slt176gto Paulo was also prohibited following measures passed in December 2007 Alcoholism is a growing problem in Mexico and a number of states are attempting to implement stricter controls in terms of alcohol consumption A recent high profile example of stricter legislation was seen in the state of Tabasco where the state congress approved a measure to ban the sale of chilled beer as part of a wider initiative to decrease alcoholism in the state The sale of ambient beer remains legal however Tabasco which has a population of around two million has one of the hottest climates in the country In Venezuela the selling of alcoholic drinks is strictly controlled Retailers can only sell alcoholic drinks between 1130am to 9pm During seasonal holidays such as Semana Santa Holy Week the government runs security operations to control consumption of alcoholic drinks with beer retailers being an especial focus given that beer is one of the most affordable alcoholic drinks for mass consumption The consumption of alcohol in the street is strictly forbidden as this is considered a source of crime In Argentina the National Anti Alcoholism Law Ley Nacional de Lucha Contra el Alcoholismo is the main piece of legislation regarding the alcoholic drinks industry comprising a series of directives controlling the legal drinking age advertising and drink driving as well as provisions for public health education regarding alcohol consumption The most notable change this law introduced was the imposition of a wide range of restrictions backed by stiff penalties involving the legal drinking age In addition to forbidding sales of alcoholic beverages to individuals under the age of 18 the law required the labels of all alcoholic beverages to include the phrase in Spanish quotSale prohibited to minors under 18quot This was particularly significant considering that beer is typically consumed by younger people in Argentina and is sold in l litre bottles in both retail and horeca channels rather than in barrels or on draught BEER IN LATIN AMERICA Market Background Consumer Expenditure on Beer Latin America recorded a decline in retail consumer expenditure on beer towards the end of the review period due mainly to the sharp fall in the value of the Brazilian real against the USS which as Brazil is the largest national market in the region had a severe effect on consumer confidence in other markets in the region Despite the notable decline in 2007 Brazil continued to record the highest expenditure on beer throughout the review period underpinned by its large population which represents about a third of the region39s total In contrast to most other countries in the region Argentina posted a substantial increase in consumer expenditure on beer during the 2003 2007 period aided by a more resilient economy as well as a more sophisticated retailing environment Mexico was another country to show substantial progress with the influence of US trends important in determining patterns of consumption Table 2 Retail Consumer Expenditure on Beer 2003 2007 US million 2003 2004 2005 2006 2007 Brazil 23692 2449 5 27948 27105 22470 Mexico 14487 1582 8 20134 21337 21102 Argentina 7586 805 8 9051 9899 10335 Venezuela 4641 3906 5192 5859 6252 Colombia 5154 577 6 5993 5621 5334 Chile 1928 204 8 2458 2384 2191 TOTAL 57488 6011 1 70776 72205 67684 Source Euromonitor from National Statistics Note 2007 figures are estimates Table 3 Retail Consumer Expenditure on Beer as of Total Alcoholic Drinks Retail Consumer Expenditure 2003 2007 value 2003 2004 2005 2006 2007 Argentina 284 292 301 300 298 Chile 284 292 301 300 294 Mexico 276 258 270 273 265 Brazil 276 258 270 273 262 Colombia 254 258 253 249 250 Venezuela 257 262 257 253 236 Source Euromonitor from National Statistics Note 2007 figures are estimates BEER IN LATIN AMERICA Market Background Beer Consumption Per capita consumption in beer in Latin America increased by 35 litres between 2003 and 2007 although there was a slight decrease in 2007 undoubtedly occasioned by the impact of the financial crisis which depressed consumer confidence across the region This was reflected more specifically in the drop in consumption in Brazil in 2006 and 2007 which was especially significant in terms of regional performance Venezuela recorded the highest beer consumption in the region despite registering considerable fluctuation between the low of 2004 and the high of 2006 Mexico and Colombia showed by far the greatest increases in consumption In the case of Colombia wider distribution helped boost consumption while the influence of US drinking trends boosted growth in both Argentina and Mexico Table 4 Per Capita Beer Consumption by Country 2003 2007 Litres 2003 2004 2005 2006 2007 Venezuela 734 67 0 758 822 729 Colombia 389 46 9 557 595 652 Mexico 466 51 5 549 550 562 Brazil 47 8 48 9 489 481 457 Argentina 29 1 28 7 304 327 339 Chi e 27 4 26 6 263 262 253 Other Latin America 285 286 299 305 290 AVERAGE 413 429 444 457 448 Source Official statistics Trade associations Trade press Company research Store checks Trade interviews Euromonitor estimates BEER IN LATIN AMERICA BEER LAEIN AMERICA Market Background Advertising With regard to the advertising of alcoholic drinks there are more restrictions on television advertising which of course has a higher profile than other media such as print and outdoor billboards Restrictions on time scheduling are applied in many countries principally Brazil and Mexico In Brazil CONAR Conselho Nacional de Auto Regulamentaclt176gto Publicitaria the Self Regulating National Advertising Board announced in May 2005 that they were revising their recommendations for advertising in selected areas CONAR39s announcement does not have the weight of a law but the entire advertising industry has historically followed all previous recommendations The main points of the new recommendations are that spirits39 commercials should not be aired before 930pm and cigarette and alcoholic beverage advertisements should not be associated with Olympic athletes While increasingly youth oriented advertising for beer in recent years has concentrated on sport culture and entertainment An additional development recently saw the introduction of advertising by product placement in television programming Direct advertising of alcoholic drinks on television however is restricted Alcoholic drinks with up to 24 of alcohol by volume can advertise at any time while those with more than 12 ABV can only advertise after 9pm Print advertising however is not subject to any restrictions Mexico also has strict advertising restrictions regarding format design and scheduling Advertisements for alcoholic drinks are therefore relatively rare on television Mexican authorities have established schedule restrictions and they can only be shown between 10pm and 6am Commercials have to be vetted by the Ministry of Health before being shown Open beer bottles are not allowed to be shown with a hand touching them Also no commercial can feature people below the age of 25 years There are further restrictions on what can be portrayed but the most significant element of any advertisement is the message quotEvite el excesoquot avoid excess which has to appear either written in white letters during the commercial or stated at least once Tn Venezuela the advertising of alcoholic drinks is not allowed in broadcast media such as radio and television This ban is not applicable however to the cinema print media or billboards Advertisers are prohibited to use sports personalities for the promotion of beer Brewers have attempted to side step these restrictions by for example using the image of malta a soft drink consumed by young people which coincidentally shares its name and packaging to a brand of beer as a way of circumventing the ban on television and radio advertising Malta is a sweet drink targeted at young people and kids and is highly recommended as a nutritious drink Malta as a brand is used to sponsor sport especially baseball where people in stadiums typically drink a lot of beer Argentina specifically prohibits advertising targeting individuals under 18 years of age portrayal of drinking by minors implying that the consumption of alcoholic beverages improves mental or physical performance and the portrayal of drinking as a stimulant for sexual or violent behaviour BEER IN LATIN AMERICA Market Background Drink driving To combat the rising number of car accidents in the region many countries have strict drink driving legislation In Brazil the government recently started the Codigo Nacional do Transito National Traffic Code which levies stiff penalties on drunk drivers Until recently the police did not administer blood alcohol level checks but this is now widespread practice The implementation of the new code reflects the country39s changing mood with respect to drink driving Brazil is now attempting to prevent and punish driving under the influence of alcohol Penalties for driving while intoxicated include fines driving licence suspension and vehicle confiscation Legislation additionally prohibits the sale of alcoholic drinks to persons under the age of 18 In practice however this restriction is rarely enforced Social drinking in Brazil generally begins at the age of 15 or 16 Argentina also has severe restrictions applied to drivers of freight and passenger transport vehicles such as trucks and buses or vehicles transporting children such as school buses For drivers of these vehicles any blood alcohol level is sufficient to constitute an offence The Anti Alcoholism Law prescribed severe penalties for all drink driving violations Other measures of the Anti Alcoholism Law addressed the population at large The labels of alcoholic beverage containers were required to include the phrase in Spanish quotDrink in moderationquot Of greater significance was a three tiered definition of drink driving A blood alcohol level of greater than 500 milligrams per litre constituted drunken driving for any motorist while blood alcohol levels of greater than 200 milligrams per litre constituted intoxication for riders of motorcycles and similar two wheeled vehicles In other countries legislation exists but is often not applied with great regularity given levels of corruption and a lack of resources BEER IN LAEIN AMERICA Market Background Drinking Habits Generally speaking beer drinking in many Latin American markets is heavily influenced by US trends Younger consumers are the driving force behind beer sales for the most part and it was the emergence of a bar culture in the region which has helped foster sales in recent years In Brazil the majority of the adult population consumes alcoholic beverages typically during the evenings or at weekend social gatherings It is socially acceptable to consume alcohol during the day but lunch time consumption is not widespread Brazilians drink beer on most occasions and with most meals There are no social stigmas or class connotations associated with the beverage Certain occasions such as weddings may be more appropriate for wine or spirits but beer is usually offered alongside other types of drink due to its popularity Although mature the market for beer in Brazil is robust and the drink does not seem in danger of losing popularity to either wine or spirits in the near future The habit of drinking beer is of course influenced by the climate and only in the south where it is cooler do Brazilians purchase significant quantities of darker beers and stouts Argentinean beer drinking habits are increasingly influenced by US trends This is reflected in many younger Argentineans39 preference for beer rather than wine the country39s traditional preference regarding alcoholic beverages In the context of Argentine food culture this tendency is combined with the growing consumption of fast food Young Argentine diners frequently choose beer as a beverage to accompany on premise consumption of international fast foods such as hamburgers and pizza The growing market for beer is becoming particularly characterised by aspirational purchases as younger consumers became aware of the image values of different brands as portrayed in advertising campaigns Mexico is another country subject to American influence As with their Argentine counterparts young Mexicans who account for a substantial proportion of the overall population are the major consumers of beer In the context of the alcoholic drinks market as a whole the most obvious influence is seen in the country39s bar culture which at an upscale level very much seeks to mirror US formats Aspirational purchases are also a key feature of the market particularly in the 20 35 age band During the downturn in the country39s economy during the late 1990s there was considerable down trading In practice however this meant a switch from a premium brand in one sector to a similar brand in a lower price segment In many circles this would be seen as preferable to a switch to a lower status bran BEER IN LATIN AMERICA BEER LATIN AMERICA Market Size by Country Beer sales in Latin America amounted to nearly 23 billion litres in 2007 slightly down over the previous year Many national markets including Brazil and Venezuela recorded a dip in volume sales in 2007 affected by the repercussions of the financial crisis which affected the region towards the en of the review period In value terms the beer market was worth nearly US40 billion in 2007 having fallen in value by nearly 7 over 2006 This was mainly attributable to the devaluation of local currencies especially the Brazilian real In spite of a disappointing performance in 2007 Brazil generated the greatest volume and value sales in the region throughout the review period The country accounted for around one third of total regional volume sales in 2007 Brazil39s importance within the region was of course based upon its large population which represented around 34 of the total regional population This correlation between population and Brazil39s share of the Latin American beer market was reflected in levels of per capita consumption which at nearly 46 litres in 2007 was just above the average figure for the region Over the review period as a whole Brazilian beer sales were poor under performing the regional market This was a direct result of an almost continuous fall in sales of the standard lager subsector which is the key subsector in Brazil The situation in Brazil was further exacerbated by the sharp fall in sales of premium lagers during 2007 a consequence of the after effects of the currency crisis To illustrate the consequences of this before the devaluation of the real premium beer cost approximately 30 more than standard beer The price difference after the devaluation was closer to 60 in both retail and horeca outlets While consumers naturally became more price sensitive beer distributors and retailers were also forced to be more cautious in terms of their attitude to marketing and promoting premium products In contrast to Brazil Colombia experienced robust growth in sales of beer over the review period being undoubtedly the star performer within the region The country saw a double digit growth in both volume and local currency constant value terms in 2007 alone As a result there was a rapid increase in per capita consumption during the review period up by 27 litres per head indicating organic growth in the beer market It is interesting to note that the position of beer in the Colombian market was strengthened by the economic difficulties the country experienced during the review period Consumers moved away from wine and spirits in favour of less expensive beers trading down within the beer market from more expensive premium products to cheaper standard lagers Moreover there was a trend which saw consumers shift from consumption of beer in horeca establishments in favour of buying through retail outlets and drinking at home Other national markets such as Argentina and Mexico saw healthy growth in volume terms during the review period Overall many national markets in Latin America saw a widening in the distribution of added value beers as well as a bigger consumer base for such drinks compared with the situation during the early 1990s Table 5 Sales of Beer by Country 2003 2007 Sales 2003 2004 2005 2006 2007 Million litres Brazil 77390 80425 81723 81601 78763 Mexico 42460 47923 51710 52839 55126 Colombia 13936 17090 20674 22461 25038 Venezuela 16011 14934 17199 19022 17178 Argentina 10107 10123 10845 11796 12417 Chile 3890 3833 3852 3880 3827 Other Latin America 34112 34741 37720 38511 37236 TOTAL 19791 20907 22372 23011 22958 US million Brazil 14216 17282 18316 17960 14895 Mexico 31083 43251 55774 60468 59824 Venezuela 31078 22087 34943 47434 50615 Colombia 21575 29695 31810 34980 33191 Argentina 18607 21656 23498 25119 26221 Chile 7446 7606 8065 8344 7665 Other Latin America 47857 45268 60289 71121 71040 TOTAL 29981 34239 39754 42707 39751 Source Euromonitor Table 6 Sales of Beer by Country Analysis 2003 2007 0 6 analysis 2003 2004 2005 2006 2007 volume analysis Brazil 391 38 5 36 5 355 343 Mexico 215 22 9 23 1 230 240 Colombia 70 8 2 9 2 98 109 Venezuela 81 71 77 83 75 Argentina 51 4 8 4 8 51 54 Chile 20 18 17 17 17 Other Latin America 172 16 6 169 167 16 2 TOTAL 1000 1000 1000 1000 100 0 value analysis Brazil 474 505 461 421 375 Mexico 104 126 140 142 150 Venezuela 10 4 65 88 111 127 Colombia 7 2 87 80 82 83 Argentina 6 2 63 59 59 66 Chile 2 5 22 20 20 19 Other Latin America 160 132 15 2 167 179 TOTAL 1000 1000 1000 1000 1000 Source Euromonitor Table 7 Sales of Beer by Country Growth 20032007 growth 20032007 20032007 20062007 CAGR TOTAL volume growth Colombia 115 158 797 Argentina 53 53 229 Mexico 43 67 298 Chile 1 40 040 160 Brazil 3 50 04 18 Venezuela 970 18 73 Other Latin America 330 22 92 TOTAL 0 20 38 160 local currency constant value growth Colombia 113 165 845 Argentina 3 8 84 383 Chile 3 50 05 20 Venezuela 5 70 33 139 Mexico 118 49 210 Brazil 171 12 48 Source Euromonitor BEER IN LAEIN AMERICA BEER LATIN AMERICA Market Size by Sector Beer consumption in Latin America is dominated by lager which accounted for over 90 of total sales in both volume and value terms in 2007 with standard lager by far the most important product in major national markets such as Brazil and Mexico In Brazil for example apart from minimal sales of nonlow alcohol beer the beer market predominantly consisted of lager Unsurprisingly lager is then the major area of competition for brewers and price is a decisive factor in securing success in Latin America where levels of disposable income are relatively low in real terms During periods of low consumer confidence Latin Americans are likely to reduce consumption rather than just trade down All subsectors in the lager sector for example saw sales decline in 2007 with the economy lager subsector affected most Intense competition in the standard lager subsector caused a drop in prices which helped retain consumers who might have migrated to the economy subsector Dark beer showed the most marked growth in 2007 up by 46 in volume and over 52 in value terms which made it the fastest growing sector in the beer market in Latin America However the strong performance from the dark beer sector failed to have any significant impact on the beer market as a whole simply because the size of the sector remained so small compared to the overall market As dark beer is by no means a traditional type of beer in Latin America growth was from a very low base Unlike lager the market penetration of dark beer is limited by restricted distribution and premium prices so the sector only recorded appreciable sales in the more developed national markets such as Argentina Chile and Mexico In Argentina for example the sector saw little activity in terms of new product development and advertising with only a few brands responsible for the majority of sales Sales of nonlow alcohol beer were stable during the 2003 2006 period with a dip in sales in both volume and value terms in 2007 Generally speaking products in this sector are little more than a novelty to the majority of consumers in Latin America Growth is hindered by consumer loyalty to traditional lager products and unfamiliarity with the concept of nonlow alcohol beer There was thus only a small consumer base for these products notably in Brazil and Argentina two of the largest markets in the region Unsurprisingly sales of stout remained negligible in most national markets including Brazil across the region Latin American consumers are generally very conservative and less likely due to low levels of disposable income to experiment with novelty products Even in Chile the country which had the highest levels of stout sales it is still very much a niche product Table 8 Sales of Beer by Sector 2003 2007 Sales 2003 2004 2005 2006 Million litres Lager 19750 20862 22323 22960 Premium lager 11448 13338 14235 14569 Standard lager 17656 18558 19922 20490 Economy lager 9489 9696 9777 10124 Dark beer 350 382 423 440 Stout 13 18 23 24 Non low 47 49 49 49 alcoholbeer TOTAL 19791 20907 22372 23011 US million Lager 29889 34122 39609 42551 Premium lager 27287 34793 39580 41427 Standard lager 26062 29505 34480 37196 Economy lager 10987 11372 11717 12125 Dark beer 760 986 1244 1334 Stout 47 65 82 101 Nonlow 110 116 119 118 alcoholbeer TOTAL 29981 34239 39754 42707 growth 2007 20062007 Million litres Lager 22887 030 Premium lager 14546 020 Standard lager 20440 020 Economy lager 9921 200 Dark beer 642 457 Stout 25 23 Nonlow 48 230 alcoholbeer TOTAL 22958 020 US million Lager 39526 710 Premium lager 38111 800 Standard lager 34723 660 Economy lager 9919 182 Dark beer 2035 525 Stout 100 080 Nonlow 110 660 alcoholbeer TOTAL 39751 690 Source Euromonitor BEER IN LATIN AMERICA Packaging Glass was the most important type of packaging in Latin America throughout the review period holding over 71 of total regional volume sales in 2007 The dominance of glass was mainly due to reasons of economy Most consumers especially those from low income groups prefer bottled beer due to the fact that glass bottles are returnable and therefore the most economical option a tradition prevalent in many countries including Colombia and Venezuela Colombia presented the highest proportion of sales packaged in glass in the region in 2007 with 92 of sales despite the fact that bottles were losing share due to the increasing popularity of beer sold in the can format across the country The can format was the second most popular packaging type in Latin America in 2007 accounting for 24 of total beer sales The can format also saw the most dynamic growth in many national markets including Mexico Chile and Argentina during the review period The format is gaining in popularity especially among middle and upper income consumer groups who are prepared to pay for premium products There was a notable sign that the can format cannibalised sales from bottles in some countries In Chile for example the rise in consumption of canned beer was primarily aided by growth in sales of premium beer which typically uses the can as preferred packaging format The rise in preference for cans was significant over the review period since they can be acquired individually or in packs thus offsetting their significantly higher price of up to twice that of the larger size bottles in Chile The keg format was relatively underdeveloped in the region accounting for under 4 of total beer volume sales in 2007 In fact kegs facilities are not commonplace in catering establishments in many countries with bottled beer being the preferred format Plastic and quotothersquot were niche packaging formats with both manufacturers and consumers showing little interest in alternative packaging formats Table 9 Sales of Beer by Country and Packaging Format Analysis 2007 o volume analysis Plast Can Glass ic Keg Others TOTAL Argentina 270 650 80 0 Brazil 260 690 45 05 1000 Chile 180 770 40 10 1000 Colombia 70 920 05 05 1000 Mexico 321 630 28 21 1000 Venezuela 130 860 10 1000 Other Latin America 240 71 7 09 3 2 02 1000 TOTAL 240 717 09 32 02 1000 Source Euromonitor Table 10 Company Shares of Beer 2006 2007 share Local company 2006 2007 AmBev 294 FEMSA Cerveza SA de CV 146 148 Grupo Modelo SA de CV 136 143 Bavaria SA 75 83 Empresas Polar 87 78 Cervejarias Kaiser do Brasil Ltda 62 60 Quilmes International SA 44 45 Primo Schincariol Tndustrias de Cervejas e Refrigerantes Ltda 28 32 Compania Cervecerias Unidas SA 28 30 Cerveceria Leona SA 23 28 Cisneros Group 08 12 Cia Cervejaria Brahma SA 210 Cia Antarctica Paulista lndustria Brasileira de Bebidas e Conexos 99 Others 54 47 TOTAL 1000 1000 Source Euromonitor BEER IN LATIN AMERICA Market Shares Consumers in Latin America tend to be loyal to domestic andor regional brewers At the same time local brewers are more active in the standard lager subsector which is by far the most important type of beer in the region International brewers tend to be market their brands mainly through the horeca channel targeting consumers in middle and high income groups Hence the volume share taken by international brewers is limited although their share of value sales would undoubtedly be higher AmBev AmBev was the market leader in Latin America in 2007 accounting for nearly one third of total regional volume sales in 2007 The company39s strength at a regional level was underpinned by its dominance of its domestic market Brazil Such was AmBev39s dominance that it accounted for over 70 of volume sales in Brazil the region39s largest national market in 2007 Aside from this the company is also present in Argentina and Venezuela AmBev Brazil39s largest beverage company and the fifth largest in the world was established on July 1 2007 as a result of the joint venture between the Antarctica and Brahma beverage companies Brazil39s Administrative Council in the Defence of Competition CADE Conselho Administrativo de Defesa da Concorrencia approved the joint venture between Brazil39s market leaders on March 30 2005 The creation of the company in one of the world39s largest markets is set to deter multinational brewers from entering or increasing their presence in Brazil while the Brazilian company seems set on increasing its international presence mainly by acquisition Despite the doubts created by the company39s monopolistic position in its domestic market AmBev claimed that its creation would help Brazilian brewers to stay competitive in the international marketplace FEMSA Cerveza SA de CV and Grupo Modelo SA de CV are the close rivals to AmBev in Latin America In second place FEMSA Cerveza has a wider geographical presence both internationally and regionally in comparison to AmBev Both of these brewers however owe much of their regional share to their strength in the Mexican market the second largest in the region multinational Players Multinational players started to seriously enter the beer market in Latin America during the mid 1990s as levels of disposable income increased economies stabilised and more consumers were willing to experiment with unfamiliar brands Consumers in middle and high income groups were the main targets for multinational players These consumers are usually well travelled and are more likely to be attracted by internationally recognised brands During the review period then there was a noticeable increase in the numbers of consumers making aspirational purchases of international brands mainly through the horeca channel Grupo Modelo SA de CV was the only regional player to hold a recognised global presence during the review period The company39s flagship brands Corona and Corona Extra are not only the most important brands in Mexico but also had a significant volume share at 11 a global level during the review period Growth in Grupo Modelo39s total regional share was attributable to the continuous success of the Corona Extra brand as well as significant sales increases for the Coronita and Pacifico brands in its own domestic market Mexico There are many global players present in Latin America although sales of their produ tend to be limited through retail and horeca channels mainly due to price and a lac familiarity as well as consumer loyalty to local brands Although multinationals generally enjoy greater success through the horeca channel the wider availability and cheaper prices characteristic of regional and domestic brands mean that they are not as popular lndustry sources indicate that it will take a significant investment in local production and distribution if international brewers are to acquire a significant presence in the region ts c of BEER IN LAEIN AMERICA Distribution Retail vs Horeca Trends Retail outlets were the most important distribution channel for beer in Latin America during the review period holding over 55 of total regional volume sales in 2007 Unlike Asian consumers consumers in Latin America generally prefer to socialise with their friends and families at home On top of such ingrained drinking habits the financial crisis which affected the region shook consumer confidence in many countries to the extent that spending out of the home decreased Nevertheless Euromonitor39s Consumer Foodservice Database 2005 recorded an increase in the numbering of catering establishments in Latin America over the review period The number of units grew by around 9 between 2003 and 2007 with Argentina and Mexico experiencing the most impressive growth As economies recover in the years to come the horeca channel will continue to provide the best platform for international brands Brazil featured the highest proportion of sales through the horeca channel with the channel accounting for 67 and 79 of total volume and value sales respectively in 2007 There were several factors contributing to this Firstly increased disposable incomes during the mid and late 1990s meant that middle and high income groups could afford to socialise in pubs and clubs whereas previously this occurred more in the home Secondly the establishment of microbreweries also helped fuel horeca sales growth for beer Thirdly sales of premium lager are especially strong in the horeca channel This is because people are more willing to try new products and spend more money when they are drinking outside the home As a result horeca sales of beer are generally less affected by economic downturn than products from other industries such as consumer durables as people switch to lower priced products such as beer when their spending power is limited Sales through the horeca channel accounted for around a third of total volume sales in Mexico Colombia and other national markets in 2007 This indicated the lower levels of disposable incomes in these countries which do not allow consumers to eat and drink out of the home on such a regular basis Table 11 Retail versus Horeca Sales of Beer by Country Analysis 2007 o analysis Retail Horeca TOTAL volume Brazil 330 67 0 1000 Mexico 609 39 1 1000 Colombia 687 31 3 1000 Venezuela 714 28 6 1000 Argentina 786 21 4 1000 Chile 814 18 6 1000 Other Latin America 672 32 8 1000 TOTAL 553 447 1000 value Brazil 210 790 1000 Venezuela 397 603 1000 Argentina 432 568 1000 Mexico 482 518 1000 39le 550 450 1000 Colombia 596 404 1000 Other Latin America 445 555 1000 TOTAL 370 630 1000 Source Euromonitor BEER IN LATIN AMERICA Distribution Retail Distribution Patterns quotOther food storesquot continued to generate the greatest volume sales among the retail distribution formats in Latin America accounting for over 46 of sales of beer through retail outlets in 2007 These outlets are small local often family owned neighbourhood shops and convenience stores in both towns and cities They benefit from the importance of returnable bottles in many countries which has made purchasing in these outlets traditionally attractive Unsurprisingly in spite of the increasing popularity of supermarkets across the region these traditional shops retained their importance in markets such as Colombia and Mexico where they are particularly important in rural areas Supermarkets and hypermarkets saw the most dynamic growth during the review period accounting for a third of total retail beer sales by 2007 This success was underpinned y the increased number 0 such outlets across the region largely at the expense of quotother food storesquot In Venezuela for example the share held by supermarkets increased by 18 percentage points between 2003 and 2007 as consumers increasingly preferred to purchase beer along with other food staples during their weekly shop in the local supermarket Furthermore large grocery multiples also tended to offer products at more competitive prices than neighbourhood food stores due to the economies of scale they enjoy Specialist stores took a relatively high share of retail sales in Latin America Chile saw the highest proportion of sales through specialist outlets in 2007 with a volume share of 40 well above the average regional figure This was due to the fact that in specialist outlets all of the products are located behind the counter with consumers receiving personal attention and sometimes even having the opportunity to haggle regarding price While the quotothersquot category was relatively popular in both Argentina and Brazil including as it does a variety of formats including convenience stores petrol stations and outdoor markets discount stores are still an emerging retail distribution format in Latin America Table 12 Retail Sales of Beer by Distribution Format and by Country Analysis 2007 o 6 retail volume SH OF SP DI Others TOTAL Argentina 214 408 175 20 183 1000 Brazil 672 204 20 02 102 1000 Chile 330 180 400 70 20 1000 Colombia 200 650 80 70 1000 Mexico 67 685 220 18 10 1000 Venezuela 400 220 380 1000 Other Latin America 274 470 172 06 78 1000 TOTAL 300 461 167 10 63 1000 Source Euromonitor Key SH Supermarkets hypermarkets OF Other food outlets SP Specialists DI Discounters BEER IN LATIN AMERICA Market Forecasts by Country All national markets are expected to see positive volume and value growth over the forecast period to be driven primarily by the economic recovery forecast to take place in most national markets during the 2007 2013 period Expected increases in levels of disposable incomes in real terms will allow a greater number of consumers to trade up to premium beers in the years to come Brazil will obviously remain the largest national market in both volume and value terms although its regional share is likely to be eroded over the forecast period In fact Brazil is expected to be the worst performing national market in the region between 2007 and 2013 The country will see moderate growth from the economy la er subsector at a CAGR of 5 in volume terms between 2007 and 2013 However Brazilians are becoming increasingly price conscious and this will affect value sales as will competition from other types of alcoholic beverage Colombia is expected to continue to make substantial progress and be the most dynamic national market in Latin America during the forecast period featuring a CAGR of over 12 in volume and almost 14 in local currency constant value terms Growth in the short to medium term is likely to be driven by increasingly competitive product positioning and growing investment in advertising and promotion Improving product quality and the development of a distribution infrastructure will also boost beer sales in a market which is developing from a relatively low base Potential joint ventures between domestic and internationalregional players may also be a source of stimulus over the forecast period Other national markets including Argentina Venezuela and Mexico will see healthy growth in both volume and value terms over the forecast period as economies recover and levels of consumer confidence increase Mexico will continue to be influenced by the US and Argentina probably the most sophisticated market in the region will see sales aided by an increasing propensity for consumers to trade up and experiment with new products and brands Table 13 Forecast Sales of Beer by Country 2007 2013 Sales 2007 2008 2009 Million litres Brazil 78763 77281 77564 Mexico 55126 58048 60797 Colombia 25038 27960 31313 Venezuela 17178 17858 18666 Argentina 12417 13044 13730 Chile 3827 3876 3941 Other Latin America 37236 39203 41334 TOTAL 22958 23727 24734 US million Brazil 14895 14711 14753 Mexico 59824 6188 9 63941 Venezuela 50615 5337 8 56213 Colombia 33191 3742 5 42359 Argentina 26221 2765 3 29256 Chile 766 5 776 6 7910 Other Latin America 71040 7438 2 77832 TOTAL 39751 40961 42504 2010 2011 2013 Million litres Brazil 78226 79016 79971 Mexico 63591 67168 69963 Colombia 3518 7 39709 44975 Venezuela 1957 9 20711 22023 Argentina 14602 15612 16764 Chile 401 5 4091 4184 Other Latin America 43704 46496 48956 TOTAL 25890 27280 28684 US million Brazil 14881 15047 15252 Mexico 66450 6871 6 70655 Venezuela 59378 6387 7 70414 Colombia 48146 5507 1 63427 Argentina 31151 33289 35691 hile 808 5 828 6 8507 Other Latin America 81731 8658 7 91467 OTAL 44375 46629 49269 Source Euromonitor Table 14 Forecast Sales of Beer by Country Analysis 2007 2013 analysis 2007 2008 2009 2010 2011 2013 volume analysis Brazil 343 326 314 302 290 279 Mexico 240 245 246 246 246 244 Colombia 109 118 127 136 146 157 Venezuela 75 7 5 7 5 76 76 77 Argentina 54 55 5 6 56 57 58 Chile 17 16 1 6 16 15 15 Other Latin America 162 165 167 169 170 171 TOTAL 1000 1000 1000 1000 1000 1000 value analysis Brazil 375 359 347 335 323 310 Mexico 150 151 150 150 147 143 Venezuela 127 130 132 134 137 143 Colombia 8 3 91 100 108 118 129 Argentina 6 6 68 69 70 71 72 Chile 1 9 19 19 18 18 17 Other Latin America 179 182 183 18 4 186 186 TOTAL 1000 1000 1000 1000 1000 1000 Source Euromonitor Table 15 Forecast Sales of Beer by Country Growth 20072013 growth 20072013 CAGR 20072013 TOTAL volume growth Colombia 124 796 Argentina 62 350 Venezuela 51 282 Mexico 49 269 18 93 Brazil 03 15 Other Latin America 56 315 OTAL 46 249 local currency constant value growth Colombia 138 911 Venezuela 68 391 Argentina 64 361 Mexico 34 Chile 21 11 0 Brazil 05 4 Source Euromonitor BEER IN LAEIN AMERICA Market Forecasts by Sector All sectors will see some growth over the forecast period with an overall CAGR of around 4 predicted in both volume and value terms between 2007 and 2013 Lager will remain by far the largest sector in the beer market with sales reaching nearly 29 billion litres by 2013 underpinned by growth in demand for standard lager Consumers in the region especially those of an older generation will continue to remain loyal to domestically produced standard lager despite the fact that some younger middle class consumers may start to consume larger quantities of imported premium lagers which will become increasingly available in catering establishments and the horeca channel generally Stout the smallest beer sector in Latin America will see robust growth over the forecast period with a CAGR of around 6 in both volume and value terms between 2007 and 2013 Sales of stout are therefore predicted to surpass nonlow alcohol beer by the middle of the forecast period Chile will record the most substantial growth in this sector due to several factors Firstly the increased availability of such products during the latter half of the review period allowed consumers especially younger consumers to experiment with what is a novelty product Secondly the distribution of stout is predicted to widen in the country during the forecast period And thirdly levels of disposable income will rise allowing younger consumers to pursue an interest in products with aspirational aspects Dark beer will also register healthy growth in both volume and value terms over the forecast period with a predicted volume CAGR of around 4 Again as in the case of stout this will not be sufficient to take it out of niche status although sales of dark beer will remain far higher than stout across the region In Venezuela industry sources indicate that the increasing popularity of premium products will be accompanied by growing demand for dark beer especially from middle and high income consumer groups who will be prepared to pay for novelty products Nonlow alcohol beer will remain very much a niche product in Latin America throughout the forecast period although demand will be relatively stable in countries such as Chile Brazil and Argentina In Brazil the largest national market consumers showed growing interest in lighter beers during the review period as they serve to quench thirst without the effects of alcohol which is attractive to certain consumer groups such as women lndustry sources commented that this trend is the main hope for progress in sales of nonlow alcohol beer over the forecast period Table 16 Forecast Sales of Beer by Sector 2007 2013 Sales 2007 2008 2009 2010 Million litres Lager 22887 23654 24659 25812 Premium lager 14546 14891 15390 16064 Standard lager 20440 21178 22122 23192 Economy lager 9921 9873 9982 10140 Dark beer 642 655 675 701 Stout 25 26 28 29 Nonlow 48 48 49 49 alcoholbeer TOTAL 22958 23727 24734 25890 USS million Lager 39526 40729 42264 44125 Premium lager 38111 38860 39890 41204 Standard lager 34723 35859 37281 38995 Economy lager Nonlow alcoholbeer TOTAL Million litres Lager Premium lager Standard lager Economy lager Dark beer Stout Nonlow alcoholbeer TOTAL US million Lager Premium lager Standard lager Economy lager Dark beer Stout Nonlow alcoholbeer TOTAL Source Euromonitor 9919 2035 100 110 39751 984 H O H u g 9943 2174 115 112 42504 CAGR 2007 2013 g H m g H g m g G N O O m m m H m g o g m g g m w w m 0 g H l H N H m 44375 BEER IN ASIA PACIFIC Beer Asia Pacific Market Overview Introduction This report analyses the market for beer in Asia Pacific For the purposes of the study the market has been divided into four sectors Lager Dark beer Stout Nonlow alcohol beer Much of the information in this report is of a statistical nature and whilst every attempt has been made to ensure accuracy and reliability Euromonitor cannot be held responsible for omissions or errors T e forecasts given are estimates based on the state of the market at the time of writing and the most reliable sources of information available Hong Kong has been treated as a separate entity alongside the People39s Republic of China of which it is a Special Administrative Region SAR This is because at the time of writing market conditions in the former colony were substantially different in terms of currency taxation and legislation from those prevalent in mainland China Figures in tables are calculated from unrounded data and may not sum xxx BEER IN ASIA PACIFIC Beer Asia Pacific Market Overview Main Findings The beer market in Asia Pacific performed as well as could be expected during 2007 given that many national markets were still recovering from the financial crisis which affected the region towards the end of the review period Rising demand in less developed national markets such as China was offset by a poor performance from the region39s largest market Japan Total beer sales in Asia Pacific amounted to over 31 billion litres in 2007 an increase of around 4 over 2006 In value terms the regional beer market was worth over US81 billion in the same year up almost 9 on the previous year Changing drinking habits coupled with an increase in the number of Western style pubs and bars were the main contributing factors to regional growth aside from more general macroeconomic factors Most national markets saw a relaxation in legislation governing the production of alcoholic drinks during the review period which also aided growth China generated the greatest volume sales in the region throughout the review period underpinned by its large population Trends favouring the consumption of drinks with a lower alcohol content combined with the increased domestic production of beer stimulated growth The final year of the review period saw a number of mergers and acquisitions between domestic players and international brewers in China Lager was the largest sector in the region in both volume and USS terms with sales amounting to 30 billion litres and US77 billion by 2007 Despite the wider availability of more exotic beer types across the region during the review period Asian consumers have not yet developed any great interest in non lager products Lager was thus also the fastest growing sector with volume growth of over 4 in 2007 driven by a strong performance from the economy lager subsector Glass was the most popular packaging format as it is the standard packaging format for lager in most national markets The tradition of using returnable glass bottles number of key national markets helped sustain the popularity of the format throughout the review period Kirin Brewery Co Ltd was the regional market leader in 2007 commanding a volume share of 73 slightly down over 2006 Kirin was closely followed by another Japanese brewer Asahi which had a 62 share of the regional market in the same year Asahi is Kirin39s main competitor both at a regional level and in Japan itself Outlets included in the quotother food storesquot category continued to generate the greatest volume sales in the retail beer market in 2007 underpinned by the large numbers of such outlets in markets such as China and Indonesia Supermarkethypermarkets are however gaining share across the region and were the most dynamic format between 2003 and 2007 accounting for 276 of total sales by the latter year Euromonitor forecasts that the Asia Pacific beer market will grow at a rate of nearly 7 in volume CAGR terms between 2007 and 2012 with strong performances from the most important sector lager as well as from less important ones such as dark beer Real value growth will be relatively modest due to intensifying competition following the maturing of beer markets across many national markets within the region BEER IN ASIA PACIFIC Beer Asia Pacific Market Background Taxation While taxation on alcoholic drinks is considered an important source of revenue in most countries levels of tax varied across the region Taxation has of course a direct impact on pricing and consumption levels Sales taxVAT is levied on most countries bar Hong Kong which as a free port has no VAT on any consumer goods Aside from general VAT or sales tax many countries levied an additional tax specifically on beer Domestic breweries in China are heavily taxed Central government generally subjects brewers to a 33 tax on income as well as 17 VAT and a special tax of RMB220 for each tonne of beer produced Consumption tax tax applied to products considered to be luxury items 0 around 10 is also levied on all alcoholic drinks Import tax on beer is around 60 although there is the possibility that both import tax and excise duties may be reduced when China offically joins the World Trade Organisation WTO In Japan beer typically attracts a tax rate of around 45 In addition VAT now at 5 is also levied making beer the most highly taxed alcoholic beverage in Japan above whisky and brandy which is typically taxed at 376 Although tax on alcoholic drinks and sales tax account for such a high proportion of the retail price of beer there is still sufficient margin left for manufacturers to make a profit Recommended retail prices are rarely adhered to with the exception of outlets such as convenience stores where good location and long opening hours allow retailers to charge full price Most retailers are able to discount beer and remain competitive while taking around 10 of the price as a profit margin In Taiwan under a new tax law all alcoholic drinks are liable for 5 VAT All imports entering Taiwan through one of its five ports are required to pay 04 in quotharbour construction taxquot Goods entering Taiwan by air freight or parcel post are exempted from this tariff Dependent on bilateral trade agreements between Taiwan and other countries import tariffs may or may not be levied on foreign alcoholic drinks after the new alcohol tax laws come into force In Singapore a specific rate of duty is applied on beer imported into or manufactured in Singapore The rate of duty is expressed on a specific amount per unit of weight volume or quantity of dutiable goods such as S3000 per litre In addition to the import duty a Goods amp Services Tax GST is payable at 30 of the sum of duty and Cost Insurance amp Freight CTF value of liquors released for local sale In Indonesia an importer of alcoholic drinks must pay import duty VAT as well as an additional sales tax on luxury goods In addition excise duty on alcoholic drinks is also applied on the basis of the retail selling price per litre andor the content of ethyl alcohol In Vietnam import and excise duty is 100 for all brands of beer This rate is levied on a Customs check price39 for the particular brand involved According to Decision 682007QD BTC issued by the Ministry of Finance all brands of imported beer have a check price of US080 per litre Tax duties were lowered by an average of 20 from January 2004 However any savings at consumer level was offset by the imposition of VAT which was applied at the same time Table 1 Sales TaxVAT on Beer by Country 2007 sales taxVAT India 200 China 170 Malaysia 150 Indonesia 100 Philippines 100 South Korea 100 Vietnam 100 Thailand 700 Japan 500 Taiwan 500 Singapore 300 Hong Kong Source Euromonitor from Official Statistics BEER IN ASIA PACIFIC Beer Asia Pacific Market Background Legislation The alcoholic drinks industry in Asia Pacific is closely regulated by individual national governments As a result there is wide ranging legislation governing the manufacturing distribution and importing of alcoholic drinks as well of course their consumption Manufacturing Domestic beer production is widely protected or controlled by governments across Asia Pacific This is particularly true for those countries which are the focus for the leading international brewers In China for example the Chinese government supports 10 large beer conglomerates by giving them favourable financial loans while in Vietnam the government retains total control over the larger breweries As part of its preparations for joining the World Trade Organisation WTO the Taiwanese government introduced legislation which allowed the private sector to produce alcoholic drinks albeit with a number of significant restrictions In Singapore domestic players enjoy lower tax rates in order to give them a competitive advantage over foreign players In spite of such protectionist measures in order to attract foreign investment some countries such as Indonesia and India at local level rather than at central government level relaxed legislation regarding the production of alcoholic drinks during 2004 In India certain individual states have found it difficult to enforce restrictions on the production of alcohol As a result they relaxed licensing legislation a move which is potentially very beneficial to foreign players intent on entering India at a regional level By encouraging the entry of foreign players local governments aim to increase their tax revenues without having to spend money enforcing stricter controls However India has perhaps the most complex regulatory framework for the alcoholic drinks industry in Asia Pacific This is because whilst licenses for setting up production units are issued by the central government it is the state governments which set duties taxes and legislation for retailing and advertising Unsurprisingly operating across the whole of India is therefore like operating in 25 different countries as states have different import and export duties value added taxes and excise duties etc In contrast to the relatively relaxed albeit complex situation in India in Indonesia which is a Moslem country there is still considerable opposition from Moslem pressure groups regarding the relaxation of legislation on the production of beer although some progress has been made with the devolvement of control regarding the licensing of distribution to local authorities As a free port legislation in Hong Kong is relatively liberal with a simple licensing system in place All manufacturers are required to apply for an import license in order to sell alcoholic drinks via their distributors in Hong Kong Hong Kong has strict legislation regarding illegal imports Any offences involving the illegal importing and selling of alcoholic beverages typically result in imprisonment changes in legislation in a particular national market can have a profound impact on the structure of beer industry as a whole In Japan for example changes in the liquor tax law in 1994 resulted in a sharp rise in applications by small companies requesting licences to brew their own beer including restaurant operators as well as sake and wine producers By 2007 the number of microbreweries had jumped to 254 underlining the significant market potential and high consumer demand for craft beers Distribution A retailing license is required to sell alcoholic drinks in most countries in Asia Pacific However in contrast to what is the case in most Western countries there are no strictly enforced limitations on when alcoholic drinks can be sold Some countries insist only on controlling the sale of alcohol during special occasions In the case of Thailand for example alcoholic drinks cannot be sold on religious days and on the eve of elections During long holidays such as Songkran and New Year39s Eve the police increase inspections along main roads to check on drivers and those found with excessive levels of alcohol are fined Unsurprisingly both China and India have differing licensing policies from region to region While in China the application process and requirements regarding the selling of alcoholic drinks vary according to each individual province there is a degree of homogeneity across the country as a whole In India however where the retail environment is considerably more complex each individual province can have very different requirements In Japan recent campaigning for the abolition of vending machines selling alcoholic drinks resulted in the Japan Liquor Merchants Association proposing a complete ban on this type of vending by 2005 Leading brewers such as Asahi and Suntory have thus started to reduce their reliance of these machines re focusing on other channels for the sale of beer As a result of this development sales through quototherquot outlets which includes vending as well as home delivery among others fell in Japan during the review period Singapore is one of the countries with the most comprehensive legislation regarding the distribution of alcoholic drinks in Asia Pacific In practice Singapore is also the country where the law is most likely to be strictly enforced which may not be the case in countries such as China and Indonesia where widespread corruption makes enforcement difficult In Singapore legislation stipulates that every importer of alcoholic drinks has to be registered with the Trade Development Board TDB The importer or their appointed agent is also required to apply for a Joint TD Import Permit Customs Goods Services Tax GST Payment Permit through the TradeNet System An enterprise intending to sell intoxicating liquor through retail or wholesale channels must apply for a liquor licence from the Liquors Licensing Board LLB The legislation governing the sale of liquor is known as the Liquor Licensing Regulations Specifically the Liquor Licensing Board issues two types of licence one is for the retail sale of alcoholic drinks for consumption on the premises while the other is for the retail and wholesale sale of alcoholic drinks for consumption off the premises In addition a licensee may apply to transfer his liquor licence to another person for the same premises The fee payable for the transfer of a liquor licence is S1000 A licensee may also apply to extend the operating hours of licensed premises In Malaysia there are two types of distribution licences for the sale of beer through a public house and sale of beer through a retail store Retail outlets are not allowed to place alcoholic drinks next to other products such as soft drinks which are commonly bought by customers below the legal drinking age Importers are also required by law from 1 April 2005 to place a sticker on the back of all alcoholic drinks39 products stating the alcoholic content of the drink As a Moslem country Indonesia has very strict legislation regarding the distribution of alcoholic drinks Law No 222004 approved in 2004 states that district authorities below the level of provincial government can independently regulate the distribution of alcoholic drinks in their area This allows for a degree of autonomy in so far as deciding the alcoholic drinks39 quota and licences to be given to retail or horeca outlets Some local governments have already begun to set annual quotas and apply their own levies to alcoholic drinks This new approach to regulating the market can be seen as a way of distributing income from beer sales to local authorities whereas previously revenue went straight into central government39s pockets The full implementation of this legislation is expected to take until May 2009 Age Restrictions By law it is illegal for persons under the age of 18 or 20 depending on country to purchase alcohol in Asian Pacific However in practice the law is not strictly enforced or observed by retailers and catering establishments In fact teenage drinkers were one of the fastest growing consumer segments during the review perio Taiwan provides an example of such unregulated selling Despite the legal age being 18 for the purchase of alcohol industry sources estimate that teenagers consumed around 25 of total alcoholic drinks by volume sold in the country in 2007 and the number of teenage drinkers is still growing Beer is the alcoholic drink of choice among Taiwanese teenagers The use of pop stars and other celebrities to endorse beer drinking on TV and in newspaper advertisements combined with a lax attitude towards the sale of alcoholic drinks to minors among retailers has been blamed for this disturbing trend In China licensed premises are in theory not accessible to youngsters under 18 however this law is not often enforced Consumers and shop owners largely ignore the law and karaoke bars are even known to employ under age girls as barmaids In Vietnam sales of alcohol to teenagers is officially frowned upon and parental control remains a relatively effective deterrent BEER IN ASIAPACIFIC Beer Asia Pacific Market Background Consumer Expenditure on Beer Beer is the most popular alcoholic drink in Asia Pacific where a predominantly hot climate is prevalent across most of the region An all year round tropical climate in countries such as Vietnam Taiwan Singapore and Thailand encourages substantial beer consumption at home as well as in hotels restaurants and bars horeca Unsurprisingly retail spending on beer took half of total alcoholic drinks in most countries in 2007 representing the highest proportion of expenditure partly for reasons of economy Compared to Eastern Europe for example Asia Pacific consumers spent less on alcoholic drinks as a proportion of total consumer expenditure with expenditure in most countries less than 1 The Vietnamese spent the most on alcoholic drinks as a proportion of total consumer expenditure The country also spent the highest proportion on beer in the region which accounted for around 87 of total alcoholic drinks retail expenditure in 2007 Beer is a very popular drink in Vietnam especially in the southern part of the country where there are more urban residents who tend to have higher disposable incomes There is also a strong influence from Western lifestyles in the south In addition the southern regions have a warm climate thus contributing to greater demand for cold drinks The fact that average disposable income is low in Vietnam makes eating and drinking out less common than it is in Singapore for example concentrating sales through the retail channel where prices are lower China the most populous country in the world spends a relatively high proportion of total retail consumer expenditure on alcoholic drinks just over 1 However retail expenditure on beer at around 47 of total alcoholic drinks39 expenditure was lower than the average for the region indicating substantial potential for future development Japan had the highest per capita consumption of beer in the region although retail expenditure on beer was just average for the region as a whole This suggests that the average Japanese consumer is more affluent as much more is spent on beer through the horeca channel proportionally than through the retail channel Table 2 Retail Consumer Expenditure on Beer 2003 2007 US million 2003 2004 2005 2006 a2007 Japan 15700 13426 11625 10067 11043 China 2100 7 25188 27011 27693 2871 8 Thailand 22934 26232 19552 13766 1558 3 South Korea 8499 9346 8510 5940 754 4 India 4891 5312 5876 6220 702 2 Taiwan 5652 5959 6152 6495 610 5 Vietnam 4227 5104 5562 5393 5938 Hong Kong 3685 4275 4734 4634 486 1 Philippines 3018 3177 2913 2434 280 2 Singapore 163 1 1748 1685 1413 148 8 Malaysia 136 2 1604 1411 926 89 8 Indonesia 49 8 567 802 398 67 9 T 23440 22277 2004 17598 19207 Source Euromonitor from National Statistics Note a estimate Table 3 Retail Consumer Expenditure on Beer as of Total Alcoholic Drinks Retail Consumer Expenditure 2003 2007 o0 2003 2004 2005 2006 a2007 Vietnam 817 811 835 873 869 Taiwan 688 70 1 690 80 8 80 6 Hong Kong 78 1 76 5 769 76 4 77 4 Singapore 80 8 79 6 793 78 9 76 6 Thailand 808 80 1 793 77 9 73 4 Philippines 602 60 0 600 60 5 59 5 Indonesia 445 50 0 500 54 5 56 3 Malaysia 605 57 7 541 59 4 54 8 Japan 579 58 0 572 54 0 54 7 China 459 46 9 465 46 8 51 2 South Korea 421 41 9 412 43 0 41 5 India 247 26 8 289 30 9 30 4 Source Euromonitor from National Statistics Note a estimate BEER IN ASIAPACIFIC Beer Asia Pacific Market Background Drink driving Drink driving is a crime in most countries in Asia Pacific Failing alcohol tests may lead to fines imprisonment the temporary or permanent loss of a driving licence However the effectiveness of the enforcement of drink driving laws varies from country to country In some countries such as China where there is widespread corruption the law is not often enforced Despite regular campaigns against drink driving in China accidents caused by excessive drinking normally peak around festive occasions such as Chinese New Year In large cities a new type of service has been introduced providing drivers to help drinkers drive their cars home safely Taiwan is facing a rising number of drink driving accidents In 2007 alone the Taiwanese police cracked down on 166024 cases of drink driving up by 21035 over 2003 Taipei City which witnessed the largest proportion of such cases introduced a series of tough drink driving laws designed to combat the menace Following a public outcry for tougher laws the cabinet revised the traffic regulation laws in December 2007 and imposed stiffer drink driving penalties Drivers under the influence of alcohol are to be fined between NT15000 and NT60000 Drivers with blood alcohol levels over 055mgl may face imprisonment In cases of casualties the drivers will also charged under criminal law In Singapore the prescribed limits for the blood alcohol concentration in 2004 were 35 micrograms of alcohol per 100 millilitres of breath 80 milligrams of alcohol per 100 millilitres of blood Any person suspected of drink driving is analysed using the Breath Evidential Analyser or the Lion Intoxilyser 6000 The Hong Kong government reviewed drink driving legislation and introduced lower alcohol concentration limits under the Road Traffic Ordinance Act effective from 1 October 2004 The new lowered limits of alcohol concentration are 22 micrograms of alcohol in 100 millilitres of breath 50 micrograms of alcohol in 100 millitres of blood 67 micrograms of alcohol in 100 millilitres of urine In less developed countries such as Indonesia and Vietnam drink driving laws are not strictly enforced In the case of Indonesia this is due to a limited budget which reduces the number of random breath tests which can be given Police activity reaches its peak during Hari Raya Idul Fitri when many commuters travel back to their hometowns on buses and in private cars In Thailand manufacturers are required to state clearly on their packaging that those under the influence of alcohol should not drive Despite the existence of tough anti drink driving legislation demand for lownon alcohol beer remained low in Asia Pacific This was partly due to availability and pricing as well as a general indifference to a product which is not heavily promoted or advertised BEER IN ASIA PACIFIC Beer Asia Pacific Market Background Drinking Habits Although eating out is an important part of indigenous culture across Asia Pacific especially in countries strongly influenced by China which includes Hong Kong Taiwan and Singapore beer drinking habits are fundamentally influenced by the West Drinking in Western style bars and pubs was a growing trend in many national markets such as China Hong Kong and Thailand between 2003 and 2007 The numbers of female drinkers are also rising in key markets such as Japan and China Chinese business culture dictates that business deals are typically concluded during a formal dinner which is invariably accompanied by alcohol Unsurprisingly then China Hong Kong Taiwan and the Chinese community in Malaysia and Singapore share some similar drinking patterns Traditional Chinese attitudes do not encourage women to drink alcohol the consequence being that women tend to drink less than men especially in public However there is a growing trend for women of younger generations especially those from middle income households mainly students and young career women to drink more Chinese culture generally allows for infrequent drinking amongst men of all classes although tradition does include occasional drinking to excess in order to celebrate an event or special occasion often to do with business or family The drinking culture is not then focused on regular drinking of moderate amounts and thus most men have a relatively low alcohol tolerance In China alcohol is typically drunk with meals outside the home although more families now have some beer stored in the fridge so that the parents typically the father can have a beer with the evening meal In the vast rural areas few Chinese will drink beer outside the meal setting and there is no established tradition of drinking in pubs or bars In large cities however younger Chinese are becoming more used to the idea of going out to a pub for a social drink Men tend to go out to drink more than women and this is usually associated with entertaining in a business context Indeed late night drinking among Chinese men is increasing and is becoming a significant social problem In terms of the wider range of alcoholic drinks more developed national markets such as Singapore and Japan witnessed an increase in the consumption of wine over beer as a result of changing lifestyles and the increasing sophistication of drinking habits during the review period Drink driving legislation also has an influence on drinking habits In Taiwan for example the recent imposition of tougher drink driving laws had an effect on drinking patterns which were imposed due to an alarming increase in the number of fatal drink driving accidents As the media focused on the drink driving problem amidst widespread public outrage many beer drinkers reduced consumption during social gatherings which is the typical drinking occasion in the country Local drinking culture encourages aggressive toasting and drinking games during most kinds of social functions be they weddings funerals or political rallies As the world39s largest Muslim nation in terms of population Indonesia has restricted market for alcoholic drinks This in itself has created a buoyant market for soft drinks The open consumption of alcoholic drinks is not acceptable either legally or socially This restriction is relaxed in popular tourist destinations such as Bali Alcohol is not therefore part of general social intercourse in much of Indonesian society Despite this beer retains a certain popularity with several local brands as well as international bottled lagers available Wine and spirits are less popular and are generally comparatively expensive especially when consumed in restaurants Industry observers believe that the increase in beer consumption in 2007 was more the result of new drinkers beginning to drink than an increase in current consumption by regular drinkers Japanese people usually drink with their co workers The section head treats the staff 0 a drink after work to maintain harmony and a homely atmosphere in the office In Japanese society it is also acceptable to get very drunk as this is seen as an expression of how much you enjoy the company In public Japanese people are typically formal although they relax considerably during informal drinking parties BEER IN ASIA PACIFIC Beer Asia Pacific Market Background Per capita Consumption Per capita consumption of beer in Asia Pacific grew by 15 litres between 2003 and 2007 having reached over nine litres by the latter year Generally speaking growth was encouraged by rising levels of disposable income across the region as well as changing drinking habits In addition slow population growth in some national markets particularly China where the 39one child per family39 rule is strictly enforced was also partly responsible for the rise in per capita consumption as China is a key influence on regional growth With the most stringent population control policy in the region combined with an enlarged production capacity per capita consumption in China at almost 14 litres in 2007 saw the most significant growth in terms of future potential Japan the economic superpower in Asia Pacific featured the highest per capita consumption in the region at over 53 litres in 2007 almost six times more than the average figure for the region As the beer market matured in Japan during the early years of the review period per capita consumption contracted by around half litre between 2003 and 2007 This pattern was also seen in other relatively developed economies across the region including Hong Kong Taiwan and Singapore The highest levels of growth in per capita consumption were recorded in countries such as South Korea China and Vietnam South Korea saw the fastest growth of all with per capita consumption up by nearly 8 litres over the 5 year period Table 4 Beer Consumption by Country 2003 2007 Litres per head 2003 2004 2005 2006 2007 Japan 538 536 53 4 53 4 532 South Korea 297 306 30 1 31 8 375 Hong Kong 343 353 35 4 33 8 337 Taiwan 244 250 23 3 24 1 219 Thailand 106 121 14 8 19 2 185 Singapore 151 151 15 1 13 8 138 China 101 112 12 4 13 0 137 Philippines 113 111 11 0 10 8 106 Vietnam 48 59 68 78 87 Malaysia 57 61 63 62 57 Indonesia 09 09 09 06 07 India 04 04 04 05 05 Other Asia Pacific 18 19 21 25 23 AVERAGE 76 80 83 8 9 91 Source Official statistics trade associations trade press company research store checks trade interviews Euromonitor estimates BEER IN ASIA PACIFIC Beer Asia Pacific Market Background Advertising Restrictions on alcohol drinks39 advertising are relatively few in non Muslim countries with various forms of advertising being possible TV is the most popular advertising medium in many countries including Japan China and Singapore In Japan advertising expenditure on beer stood at Yen 684 billion in 2007 a decrease of 5 over the previous year Television accounted for 66 of total adspend reflecting television ownership rates of almost 95 Newspapers also featured numerous advertising campaigns specifically targeting businessmen Japanese advertising campaigns for beer featured a number of famous celebrities Female consumers are an increasingly targeted consumer segment The Singaporean government does not impose any strict restrictions regarding the advertising of alcoholic drinks Most advertisements are on television andor radio in newspapers leading lifestyle and nightlife magazines and on billboards Sponsorship of certain TV programmes is also a common way of ensuring effective exposure to a target audience and often these programmes are sports related Taiwan saw a change in advertising legislation during the review period Advertisements for alcoholic drinks were banned in Taiwan between 1994 and 2002 A relaxation in advertising regulations in 2003 helped stave off a decline in alcohol sales Nevertheless there are still some restrictions for advertising through certain types of media While manufacturers and importers can advertise their products freely in newspapers and magazines alcoholic drinks advertising is only allowed on cable television between 900pm to 600am and 930pm and 600am for radio and terrestial television Religion is an important factor in forming official attitudes to alcoholic drinks advertising As a principally Catholic country the Philippines established minimum requirements regarding the advertising of liquor in both print and broadcast media in 2005 Under the recently introduced measures advertising in publications with more than 10000 readers under the age of 21 will be restricted to text only advertising in black and white print Meanwhile liquor advertising on television between 0700hrs to 2200hrs will be limited to a picture of the beverage quotwith factual objective audio informationquot about the product The bill also provides for restrictions on alcoholic drinks39 manufacturers seeking to sponsor events In Muslim countries such as Indonesia and Malaysia there are stringent restrictions on the advertising and promotion of alcoholic drinks In Malaysia for example advertising through broadcast media on billboards and on bustrain panels is prohibited It is however allowed in cinemas and non Malay language print media The beer industry is known for using sexually provocative models for the purposes of advertising At Chinese restaurants and some pubs Carlsberg Brewery Malaysia and Guinness Anchor Berhad hired women to promote their beers by approaching customers directly In Vietnam only beer can be advertised through mass media such as television radio and at sporting occasions but this is limited to one brand name per newspaper television programme or magazine Carlsberg advertises on television by sponsoring live telecasts of English Premiership football matches Heineken and Tiger were sponsors for sporting events in Ho Chi Minh City and other southern provinces the major regional markets for these brands Total volume sales of beer stood at 31 billion litres in Asia Pacific in 2007 having increased by over 4 on the previous year with value sales equivalent to around US81 billion Growth was stifled by the slow recovery of consumer confidence in 2007 which had been depressed by the financial crisis of 2002 2003 Sluggish domestic demand in China coupled with recession in Japan were the main contributing factors to slowing regional growth over the 5 year period It should be noted however that less developed national markets such as India Vietnam and Indonesia recorded double digit growth in both volume and local currency constant value terms during 2003 2007 This growth was generally from a low base India for example has the lowest per capita consumption of beer in the region at just half litre in 2007 which was much lower than the regional average level of over nine litres per head in the same year China represented the largest national market in volume terms in Asia Pacific in 2007 accounting for 56 of total volume sales However China only held around 18 of total regional value sales in the same year indicating that the price of beer is relatively low in China and competition is mainly concentrated in the economy lager subsector China39s beer market in volume terms was of course underpinned by its large population which represented over 44 of the total regional population in 2007 Rising living standards combined with the increased production of beer in China was the main reason behind positive growth However 2007 saw slower volume growth than the CAGR of over 9 seen during the review period as a whole reflecting the fact that demand for general consumer goods was sluggish and beer remains something of a luxury for the average Chinese consumer 70 of whom live in poor rural areas Urban based consumers are becoming more cautious in spending due to a lack of job security as massive redundancies within state owned enterprises have shaken consumer confidence Japan was by far the most valuable national market throughout the review period with sales reaching a value of just over US50 billion by 2007 This economic superpower also had the highest per capita consumption in Asia Pacific at around 53 litres in 2007 Despite this recession in Japan affected the beer market reflected in its declining share of regional sales in both value and volume terms The growing popularity of other alcoholic drinks such as wine and cocktails reduced demand for beer In addition growing health awareness resulted in a shift away from beer to soft drinks Moderate growth in the nonlow alcohol beer sector which is small compared to other sectors failed to offset the decline in the overall market The fastest growing national market in 2007 was South Korea with sales up by nearly 19 in volume and 2 in local currency constant value terms The Korean beer market was driven by the revival in levels of disposable income following the financial crisis of 2002 2003 Restored consumer confidence boosted demand for novelty products such as stout although growth was from a very low base The increasing number of younger consumers and female drinkers favoured growth in beer sales The beer market in Indonesia bounced back in 2007 after several years of declining sales between 2003 and 2006 with growth of around 14 in both volume and local currency constant value terms During the economic turmoil occasioned by financial crisis distribution and production was disrupted mainly by factors such as social unrest and looting Constrained by religion and the lack of an established drinking tradition Indonesian beer drinkers drank less in quantity as well as in frequency compared to some of their regional neighbours Growth in 2007 was partly the result of the emergence of new drinkers rather than an increase in consumption by regular drinkers Thailand Malaysia and Taiwan suffered a decline in beer sales 2007 as a result of a number of factors In Malaysia for example import and excise duties which was passed on to consumers who being price sensitive reduced consumption In Thailand the boom in economy lager failed to compensate for a steep fall in sales of standard lager which was affected by the repercussions of the financial crisis Table 5 Sales of Beer by Country 2003 2007 Sales by volume and value 2003 2004 Million litres China 12241 13768 Japan 67574 67502 South Korea 13413 13913 Thailand 6182 7097 Philippines 7690 7758 Vietnam 3574 4413 India 3522 3733 Taiwan 5191 5361 Hong Kong 2109 2228 Indonesia 1794 1690 Malaysia 1188 1288 Singapore 513 543 Other Asia Pacific 8395 9020 TOTAL 24356 26223 US billion Japan 637 558 China 100 114 South Korea 28 62 Taiwan 28 30 Hong Kong 15 16 Thailand 12 13 Malaysia 16 17 Singapore 09 11 Philippines 10 11 Vietnam 04 05 India 06 07 Indonesia 09 09 Other Asia Pacific 14 15 TOTAL 888 868 Source Official statistics trade associations store checks press company research Euromonitor estimates Table 6 Sales of Beer by Country Analysis 2003 2007 sales by volume and value 2003 200 4 2005 15268 67406 13829 8774 7840 5191 4123 5055 2301 1753 1361 560 10641 28151 50 H OOOHHHHHNU N mquHmmqqmmN 2005 2006 16478 6758 1467 1153 787 610 450 526 222 132 137 53 1242 3 8 6 8 6 9 5 3 7 9 3 0 30022 46 13 LA NdOOOOwl Nmmwwo OOOOOHHHN 1 74 200 am 6 2007 17544 67362 17442 the decline was caused by an increase in 11205 7925 695 481 7 5030 8 2249 151 128 55 0 7 4 11692 31347 l U OOOOHHHHNgtJgtgtJgtO H trade trade interviews mmwol gtJgtIIU JgtJgt m 2007 o 6 volume analysis China Japan South Korea Thailand Philippines Vietnam India Ln 0 Ln Ln gt5 Ln gt5 Ln m N l N m N m N N N H Ln Ln gt5 gt5 Ln Indonesia Malaysia Singapore Other Asia Pacific 3 TOTAL 1000 1000 1000 1000 1000 value analysis H DJ H 2 DJ 5 OOOONHi WN NWle 5U NU U QLO OOOONHi WN Nmmmogt5QqudL OOOOHl l Nw NU mooooLnooooHtoLoN OOOOHi NNW UquotgtJgtIOOU OGOOU OOOOHi NNW gt5UquotIU OIU OOU O H m gt5 m 00 gt5 H m l q M U N 39d l H m gt5 m H m H m N O 39539 F 39d N H H H m H m H 00 H 1 LA 1 South Korea Taiwan Hong Kong Thailand Malaysia Singapore Philippines Vietnam In gs Ln H O o H H H H H m o a m H H a m a H H m a H O o H H H H H m me m N m Uim 5 N H m H O o H H N H N m cgtm m m m 0 1H m w 4 m cgtH H H H H H N m ugto o H N m N H a m w cgtH H H H H H N N WOONNgt5QHQUWQO m H 00 N o N H N 0 Pacific 1 TOTAL 1000 1000 1000 1000 100 O Source Euromonitor Table 7 Sales of Beer by Country Growth 20032007 0 6 growth by volume and value 20032007 20032007 20062007 CAGR Total volume growth South Korea 188 6 8 300 Vietnam 139 181 947 Indonesia 138 420 158 India 116 93 428 China 65 94 433 Singapore 39 19 80 Hong Kong 12 16 66 Philippines 06 08 31 Japan 030 010 030 Thailand 290 160 812 Malaysia 670 20 84 Taiwan 850 180 720 Other Asia Pacific 590 86 39 TOTAL 44 65 287 local currency constant value growth India 15 4 87 39 4 Vietnam 138 244 139 7 Indonesia 135 110 37 2 Singapore 55 23 9 5 China 52 69 30 4 Hong Kong 27 O2O 1 00 South Korea 20 205 110 8 Japan 020 060 220 Philippines O2O 05 21 Thailand 830 90 413 Malaysia 980 150 580 Taiwan 118 420 158 Source Euromonitor Lager was by far the most important sector in both volume and value terms accounting for over 98 of total volume sales and close to 95 of value sales in 2007 Lager39s dominance came from factors such as price climate and established beer drinking traditions China the key national market in volume terms was the most influential in underpinning the dominance of lager as this type of beer accounted for virtually all beer sales in the country throughout the review period The positive growth in lager sales during the review period was boosted by the rapid development in the economy lager subsector especially in countries such as Thailand China Japan and the Philippines In Thailand for example economy lager grew by nearly 273 in volume terms in 2007 alone a direct result of the fall in consumers39 purchasing power during the financial crisis which caused them to trade down to cheaper products Unsurprisingly at a regional level strong sales of economy lager forced standard lager into decline given that levels of disposable income remained low in Asia Pacific and were affected by financial crisis in 2002 2006 a factor which also constrained the development of the premium lager subsector in most countries Thailand suffered the greatest loss in terms of the standard lager subsector with a decline of over 72 in volume terms in 2007 Japan also recorded a reduction of consumption of standard lager down by nearly 10 in volume terms during 2007 The phenomenal growth of economy lager comprising happoshu low malt beers and private label brands succeeded in eroding market share from the once all powerful standard lager subsector in Japan Premium lager is naturally the subsector most sensitive to fluctuations in levels of disposable income and unsurprisingly it experienced only moderate volume growth with an increase of just over 3 in 2007 boosted by widening distribution rather than any marked increase in demand Growth was also boosted by the recovery in levels of real income particularly in relatively developed national markets such as Hong Kong South Korea and Singapore Singapore is a good example of the pattern of development of premium lager Asia Pacific Breweries and other importers engaged in intensive advertising and promotional activities in order to get their new premium products established in the market as they saw consumers moving away from traditional products to more distinctive and exotic premium lagers Trendy consumers in their 20s and 30s were especially receptive to premium beers since they are more influenced by the Western culture than older consumers Dark beer has never been a popular drink in Asia Pacific with negligible sales in most countries throughout the review period Hong Kong the Philippines and Taiwan were the few national markets with appreciable sales of dark beer Marginal growth derived mainly from Hong Kong and the Philippines which benefited from an enlarged consumer base in 2007 especially in Hong Kong where a growing number of local Chinese consumers are starting to experiment with more exotic products while Western expatriates continue to be the main consumers Stout remained a small sector in Asia Pacific throughout the review period with a slight decline in volume terms although there was an increase of over 6 in value terms in 2007 Taiwan was most affected in 2007 with sales down by over 50 in volume terms on the previous year In general Asian Pacific consumers are not used to the taste of stout and consumption is mainly out of curiosity and drinkers39 willingness to experiment While stout sales were negligible in the region39s largest market by volume China the sector suffered a sharp decline in both volume and value terms in Malaysia in 2007 There were several factors behind this decline Besides the hike in excise duty and 12 the economic slowdown a lack of interest from younger consumers had an adverse effect on sales of stout which was not promoted as a trendy product and was hence mainly consumed by blue collar workers and ex pats The nonlow alcohol beer sector performed poorly with sales declining marginally in 2007 As was the case in stout the vast majority of consumers across the region are not interested in the product One 0 the reasons is the relatively high price of the product in comparison to soft drinks which are the natural alternative for people who wish an alcohol free drink As a consequence the sector saw appreciable volume sales in only a few countries such as South Korea the Philippines and Japan during the review period Japan a key influence on regional growth patterns accounted for over 90 of total regional volume sales of this type of beer in 2007 As a consequence the decline in sales of nonlow alcohol sector in Japan caused a fall in sales at a regional level Table 8 Sales of Beer by Sector 2003 2007 Sales by volume and value 2003 2004 2005 Million litres Lager 23917 25771 27693 Premium lager 25930 27100 28118 Standard lager 91291 94753 98556 Economy lager 12195 13586 15025 Dark beer 2155 2230 2249 Stout 1450 1495 1534 Non low alcohol 781 792 803 beer TAL 24356 26223 28151 US billion Lager 838 821 77 1 Premium lager 236 21 7 20 4 Standard lager 486 47 7 42 7 Economy lager 117 127 140 Dark beer 21 20 1 9 Stout 20 20 1 9 Non low alcohol 08 07 0 6 beer TOTAL 88 8 86 8 815 20069 2006 2007 growth Million litres Lager 29570 30892 45 Premium lager 28608 29606 35 Standard lager 97598 88474 930 Economy lager 16949 19084 126 Dark beer 2256 2297 18 Stout 1458 1448 070 Non low alcohol 808 807 010 beer TOTAL 30022 31347 4 4 US billion Lager 709 77 1 88 Premium lager 191 21 3 11 2 Standard lager 35 1 36 0 2 7 E onomy lager 16 7 19 8 19 0 Dark beer 1 7 18 7 3 Stout 1 5 16 6 4 Non low alcohol 0 6 07 11 2 beer TOTAL 74 7 81 3 8 7 Source Official statistics trade associations trade press company research store checks trade interviews Euromonitor estimates Glass was the most important packaging format in most Asian Pacific countries holding over 68 of total regional volume sales in 2007 In India glass bottles represented nearly 100 of beer sales in 2007 As glass bottles are the industry standard for beer packaging in India other formats have little chance of challenging its position in the near future Despite this the can format became more fashionable amongst affluent consumers during the review period as it is used principally for expensive imports Unsurprisingly most Indian consumers stay loyal to the bottle format In some countries in Asia Pacific such as Japan China the Philippines and India returnable glass bottles are still the dominant packaging format In China however recently some local authorities have changed regulations in order to eliminate the circulation of sub standard glass bottles It is interesting to note that in relatively developed national markets such as Hong Kong Taiwan and Singapore an increasing number of predominantly younger consumers see drinking beer from a glass bottle as being more fashionable than drinking from a can In horeca channels bottled beer is particularly popular which affected the keg format Cans was the second most popular packaging format in the region increasing its share in many countries including China Japan Thailand and the Philippines Japan featured the highest proportion of total sales taken by cans where the format accounted for over half in 2007 mainly due to the format39s advantages regarding durability recyclability and storage The keg format is mostly used in horeca channels taking around 8 of total volume sales in 2007 at a regional level Singapore featured the highest proportion of beer sold in kegs in 2007 with the format accounting for over 61 of total volume sales Eating and drinking out is commonplace among Singaporean consumers and draught beers are mainly served in catering establishments where they continue to be popular despite the growing availability of premium beer in glass bottles during the review perio While the plastic format saw negligible sales across the region throughout the review period formats included in quotothersquot took a small share in China and the Philippines In China lager sold loose proved popular in some coastal cities during the Summer Some manufacturers set up mobile stands in residential areas and distributed free samples to consumers in an attempt to stimulate demand Table 9 Sales of Beer by Country and Packaging Format Analysis 2007 o volume analysis Plast Can Glass ic Keg Others Total China 120 805 70 05 1000 Hong Kong 450 370 180 1000 India 04 996 1000 Indonesia 290 622 88 1000 Japan 510 392 98 1000 Malaysia 240 630 130 1000 Philippines 230 705 20 4 5 1000 Singapore 290 100 610 1000 South Korea 200 600 200 1000 Taiwan 426 564 10 1000 Thailand 250 700 50 1000 Vietnam 155 587 258 1000 Other Asia Pacific 22 7 683 86 04 1000 TOTAL 227 683 86 04 1000 Source Euromonitor The beer market in Asia Pacific is fragmented mostly between regional and domestic brewers Overall Japanese brewers maintained a certain dominance while Chinese producers increased share at a regional level in 2007 The two leading brewers in Asia Pacific were the two leading manufacturers of beer in Japan However in 2007 the state owned Chinese conglomerate Tsingtao Breweries Co was the best performer improving in third place and threatening Asahi39s second position Japanese brewers Kirin39s leading position stemmed from its importance in its own domestic market the most important by far in value terms where it accounted for over one third of total beer sales in 2007 Despite Kirin39s success with its newest brand Tanrei in Japan the company lost some share at a regional level in 2007 partly due to a poor performance in Taiwan Tanrei was a launched in 2003 in Japan a happoshu low malt beer with an alcohol content of 55 This draught beer very reasonably priced for the Japanese market was well received Tougher domestic competition prompted Kirin to look into expansion both domestically and internationally At the end of 2007 Kirin Brewery and Anheuser Busch renegotiated a joint venture which allowed Kirin Brewery to brew all Anheuser Busch39s brands in Japan as well as allowing Kirin Brewery39s marketing team to pitch Budweiser to the Japanese consumer Kirin39s international focus is centred very much on the potentially very lucrative Chinese market Kirin is involved in a joint venture in China Zhuhai Kirin President Brewery based in Guangdong province and it acquired a 45 stake in Lion Nathan of New Zealand which operates around Shanghai in 2003 thus strengthening Kirin39s geographical presence in China a key are given the country39s vast size The company further announced its intention to expand its operations to more provinces in China during 2007 Asahi was Kirin39s closest rival in both its domestic market and in the region as a whole The eponymous Asahi brand is the company39s key product enjoying a significant presence in Japan and notable shares in Hong Kong Malaysia Singapore and Taiwan Asahi39s position derived mainly from its importance in its domestic market although the company is actively involved in expanding its oversees operations It is reported that China will be the main target for international expansion during the next five years Local players Local players are particularly strong in the region as consumers are accustomed to the taste of local beverages Domestic companies commanded important shares in national markets such as China Tsingtao Thailand Thai Beer Singapore Tiger Beer and Taiwan Taiwan Tobacco amp Wine Board Tsingtao39s impressive performance at a regional level was boosted by a strong performance in its domestic market where it took over mediumsmaller sized players across China broadening its brand portfolio as well as strengthening its share in selecte export markets Although the company only had significant shares in Hong Kong and Singapore its importance in the beer market in China firmly underpinned its regional position To counter competition from foreign breweries the Chinese government has encouraged and supported domestic companies in their fight to expand and secure a firm foothold at a national level This was also considered a key aim as a national strategy for preparation to join the World Trade Organisation During 20072008 Tsingtao strengthened its position in southern China In 2004 the company purchased Huangmei Brewery Co previously owned by Australian Fosters Brewery Co Ltd in Zhuhai establishing Tsingtao Zhuhai Co Ltd During 2005 Tsingtao Zhuhai Co Ltd launched a new brand Xiang Jiang beer to compete directly with existing player Zhuhai Kirin President Brewery Co Ltd whose major brands are Haizhu and Kirin Tchband Around the same time the company also attempted to gain more experience by going into partnership with brewers with international operations setting up the joint venture Shenzhen Tstingtao Beer Asahi Brewery which it nominally controlled with a 51 stake in 2004 San Miguel Corp is another strong regional player in Asia Pacific its position underpinned by a large brand portfolio Blue Tce Pale Pilser Red Horse and San Miguel Despite a weaker performance in 2007 in comparison to 2003 mainly due to a weak domestic market the company still maintained over 70 of total volume sales in the Philippines The company also gained share in Hong Kong India and Singapore during the same year multinational presence Global players such as Heineken and Carlsberg had a significant share of the beer market in Asia Pacific However penetration was made difficult by Asian consumer39s strong 15 loyalty to domestic or regional brands which normally feature lower prices and are more familiar in terms of taste to local consumers The slow recovery of the economy in the region also limited market penetration for global players who tend to market premium lager products Heineken a typical premium brand is specifically marketed through the horeca channel in countries such as China and Thailand However Heineken39s sales at the retail level remain minimal due to its high price Private label Private label brands were present in relatively developed national markets such as Japan and Hong Kong However the role of private label remained relatively marginal at a regional level due to constant price reductions in branded products during the 2003 2007 period In Japan for example the launch of economy brands from the top domestic manufacturers with the exception of Asahi put pressure on private label brands The Japanese consumer can readily purchase crates of bottled beer and the empty bottles can be returned to the outlet and a deposit refunded Bulk buying in this manner means that consumers get a substantial discount over the standard price thus further reducing the attractiveness of private label products Private label products do not generally command sufficient consumer loyalty to make this method economically viable Table 10 Company Shares of Beer 2003 2007 6 share 2003 2007 Kirin Brewery Co Ltd Asahi Breweries Ltd Tsingtao Brewery Co Hite Co Ltd The Sapporo Breweries Ltd Beijing Yanjing NRqu oommmus NRqu mooton Beer Group 17 23 San Miguel Corp 23 22 Doosan 20 21 Suntory Ltd 16 19 China Resources Enterprises Co Ltd 13 1 9 Beer Thai 1994 04 17 Guangzhou Zhujiang Brewery Co Ltd 11 15 Anheuser Busch Cos Inc 13 15 Sichuan Blue Sword Group 11 14 Heineken NV 14 14 Chongqing Brewery Group 13 13 Taiwan Tobacco amp Wine Board 14 13 Boon Rawd Brewery 24 11 Carlsberg AS 10 11 Private label 01 03 Others 588 550 TOTAL 1000 1000 Source Euromonitor BEER IN ASIA PACIFIC Beer Asia Pacific Distribution Retail vs Horeca Trends Asia Pacific in comparison with other emerging regions such as Eastern Europe featured relatively high levels of horeca sales the channel accounting for over 40 of total volume sales in 2007 Socialising in catering establishments either for the purposes of 16 business entertainment or family gatherings is part of the culture in many Asian countries particularly China Hong Kong Singapore Taiwan and Malaysia Cheap labour across the region and low costs enable horeca outlets to offer affordable prices to consumers across most countries The extreme in Asia Pacific was represented by Singapore with the highest proportion of horeca sales in 2007 at over 82 of total volume and nearly 95 of tota value sales The improved economic health and attractive marketing promotions held in catering establishments were the main reasons for such high levels of horeca sales As the economy recuperated from the regional currency crisis a higher proportion of beer was consumed in coffee shops drinking stalls in markets and pubs than in 2006 Horeca outlets have also increased their total volume market share as a result of successful promotions The high density of pubs and bars in central locations long operating hours they are typically open until 0300hrs plus the widespread institution of quothappy hourquot in an attempt to keep sales volume up sustained the dominance of the horeca channel throughout the review period Moreover well established tourism in Singapore is another factor behind the high proportion of horeca sales Interestingly Japan featured the highest proportion of retail sales but relatively low beer sales through horeca channels There are several factors behind this Firstly the retail market for beer in Japan is well developed aided by the high penetration of vending machines which until very recently further served to maintain retail sales Secondly there is a long tradition of drinking beer at home in Japan particularly with meals Companies such as Asahi even market snack products such as Beer Partner specifically to accompany beer drinking at home Lager is the most popular type of beer and many households purchase bottled beer in bulk from local suppliers who deliver to the door and collect any empties Finally despite the fact that corporate entertainment is an integral part of Japanese business life average consumers are put off from expensive entertainment areas such as hostessed snack bars or karaoke rooms due to very high prices As was the case in Eastern Europe foreign imports were normally first introduced to many Asian countries such as Taiwan Thailand and China through the horeca channel In China for example the retail market was dominated by standard and economy products mainly produced by domestic brewers while premium products took a higher proportion of horeca sales in 2007 The rapid development of bars selling beer in large cities attracted younger consumers and affluent businessmen who are more adventurous in experimenting with less well known products Constant promotions by premium lager manufacturers importers and distributors also had a positive impact on horeca sales Heineken claims that it is the fastest growing premium brand in the horeca channel in China Vietnam has one of the highest proportion of horeca sales in Asia Pacific This is the result of well established local drinking habits where Vietnamese men tend to gather with friends at restaurants and drink beer with their meal Drinks are frequently only slightly more expensive than through retail channels in a deliberate attempt to attract customers into the restaurant Low price strategies and prompt door to door delivery service to horeca outlets adopted by famous brands such as Tiger and San Miguel also served to boost horeca sales Finally an increasing level of disposable income especially in urban areas coupled with the increasing influence of Western lifestyles has also contributed to the growing popularity of beer in Vietnam Table 11 Retail versus Horeca Sales of Beer by Country Analysis 2007 analysis of sales by volume and value Retail Horeca TOTAL volume Singapore 176 824 1000 Vietnam 196 804 1000 Malaysia 300 700 1000 Indonesia 372 628 1000 Taiwan 502 498 1000 Thailand 510 490 1000 China 548 452 1000 South Korea 550 450 1000 Hong Kong 578 422 1000 India 701 299 1000 Philippines 723 277 1000 Japan 776 224 1000 Other Asia Pacific 597 403 1000 TOTAL 594 406 1000 value Singapore 53 947 1000 Malaysia 134 866 1000 Vietnam 181 819 1000 Hong Kong 217 783 1000 Ta an 268 732 1000 Indonesia 284 716 1000 South Korea 383 617 1000 China 426 574 1000 Japan 434 566 1000 Philippines 516 484 1000 Thailand 598 402 1000 India 602 398 1000 Other Asia Pacific 536 46 4 1000 TOTAL 417 583 1000 Source Euromonitor BEER IN ASIA PACIFIC Beer Asia Pacific Distribution Retail Distribution Patterns quotOther food storesquot was the most important retail distribution format in Asia Pacific accounting for nearly 35 of total volume sales of beer in 2007 This retail format remained popular in less developed national markets such as China Indonesia Malaysia and the Philippines quotOther food storesquot tend to be traditional neighbourhood stores which are valued for their convenient location and personalised service In recent times however these outlets have begun to face increasing competition from more modern retail formats principally supermarkets and hypermarkets In Japan the most recent development in the retail sector saw the relaxation of the Large Scale Retail Store Law which resulted in a drop in share held by local independent stores as large volume stores such as supermarkets and discount stores increased in number The main trend across the region not just in Japan was the progress made by grocery multiplies Asian consumers increasingly prefer to do their shopping in these one stop retail outlets which typically offer a wide variety of food and non food items as well as a modern air conditioned shopping environment Taking advantage of greater shelf space supermarketshypermarkets are able to conduct frequent sales promotions reducing prices on items which results in them undercutting small businesses such as those included in quotother food storesquot which do not enjoy the advantages of economies of scale In line with general levels of economic development supermarkets have achieved greater penetration of the retail sector in countries such as Hong Kong Singapore South Korea and Taiwan Specialist outlets managed to take just over 17 of total retail volume sales at a regional level in 2007 These outlets have not yet developed a significant presence in national markets such as Hong Kong Indonesia Malaysia and South Korea Beer in India is sold only through specialist liquor stores which have to obtain a license in order to sell it Given the restrictions on mass media advertising distribution is of critical importance if a brand is to be successful in India There were an estimated 25000 licensed specialist outlets selling alcoholic beverages in India in 2007 The quotothersquot category which includes vending machines street vendors and Internet sales took over 15 of total retail volume sales in 2007 Japan had the highest proportion of sales through the quototherquot channel reflecting the popularity of vending machines in the country Vending machines are located on most street corners in hotels and outside liquor stores In recent years growing public concern over the inability to regulate sales to minors resulted in brewers voluntarily reassessing their reliance on vending machines which are expected to fall in number in short to middle term 18 As retail formats evolved with the development of technology and penetration of the Internet sales of alcoholic drinks through the Internet grew in Singapore in 2007 Leading supermarket chains such as Cold Storage offered the possibility of purchasing through the Internet although sales remained minimal in 2007 In the long term on line sales of beers may increase especially for leading brands as affluent Singaporeans lead increasingly busy lifestyles Nevertheless on line sales are unlikely to threaten other retail formats due to a well established preference for quotphysicallyquot examining a product prior to purchase Table 12 Retail Sales of Beer by Distribution Format and by Country Analysis 2007 o retail volume SH OF SP DI Others TOTAL China 310 520 17 0 1000 Hong Kong 520 220 260 1000 India 1000 1000 Indonesia 150 500 05 25 320 1000 Japan 138 105 184 150 423 1000 Malaysia 240 570 10 180 1000 Philippines 230 65 0 40 20 60 1000 Singapore 610 290 40 60 1000 South Korea 720 280 1000 Taiwan 500 300 150 50 1000 Thailand 450 20 0 50 200 100 1000 Vietnam 50 280 270 400 1000 Other Asia Pacific 190 353 186 32 239 1000 TOTAL 276 348 172 53 151 1000 Source Euromonitor Key SH Supermarketshypermarkets OF Other food outlets In volume terms the beer market in Asia Pacific is expected to grow slightly faster than it did during the review period with a CAGR of nearly 7 predicted over the 2007 2012 forecast period All national markets will achieve positive value growth in real terms as a direct result of national economies recovering across the region Some national markets such as China are predicted to come out of deflation during the early years of the forecast period The 2007 World Cup jointly hosted by Japan and Korea is expected to boost consumption of beer particularly in horeca channels across the region Positive performances from key national markets such as Japan China and Thailand will be instrumental in shaping regional forecast growth patterns Increasing levels of purchasing power coupled with further opening up of the beer market including the possible reduction in duty in many countries notably China Thailand and India should serve to boost overall consumption of beer across the region as a whole China the most populous country in the world will unsurprisingly remain the most important national market in volume terms throughout the forecast period accounting for over half of total volume sales by 2012 The Chinese beer market is expected to grow substantially with a CAGR of around 6 in volume terms and 5 in constant value terms between 2007 and 2012 Growth will continue to be driven by consumer trends favouring drinks with a lower alcohol content a trend which was greatly encouraged by the government during the review period The opening up of the country39s vast rural regions will expand the potential consumer base for beer in the years to come China39s imminent entry to the WTO will bring new opportunities to both domestic players and the leading multinational breweries although this will result in intensified competition Beer prices are expected to stabilise as a result The potential reduction in import tax will allow domestic players to upgrade their equipment buying in from abroad expanding production and improving product quality In value terms Japan will remain the most important national market with sales totalling over US53 billion by 2012 over half of total value sales in the region The market in Japan which is mature will however see only incremental growth during the forecast period Price sensitivity will continue to influence beer purchasing patterns with happoshu lager showing healthy growth though not quite to the same extent as recorded during the review period As the most influential country in terms of product innovation in the region Japanese brewers will help boost the penetration of new products such as additive free and all malt beers as well as low calorie lagers to other national markets across the region Thailand is expected to be the fastest growing beer market over the forecast period with a CAGR of around 19 in both volume and local currency constant value terms As the economy recovers and the beer market opens up further demand for beer will be further boosted In a similar vein to what is expected to happen in China a potential reduction in import tax should help domestic players to compete and stimulate demand by improving product quality The promotion of tourism by the government and the continuing influx of foreign brands are expected to underpin rising demand fo premium products particularly through the horeca channel Growth in India will be affected by factors similar to those present in Thailand but sales growth will also be underpinned by the changing lifestyles of the more affluent sections of the country39s middle class where social drinking is increasingly acceptable Changes in legislation such as the possible removal of restrictions on the expansion of production capacity will also help underpin an expected rise in demand In the longer term a slow shift in social attitudes towards beer drinking from viewing it principally as an intoxicant to accepting it as an accompaniment to food will fuel growth Relatively developed national markets such as South Korea Singapore Hong Kong and Taiwan will see moderate overall growth between 2007 and 2012 The maturity of the beer market in these countries will e the major contributing factor to influencing levels of growth Competition in these countries will be focused on the premium end of the market as brewers concentrate on boosting value growth mainly by intensive advertising and promotion of more expensive premium brands Table 13 Forecast Sales of Beer by Country 2007 2012 Forecast sales by volume and value 2007 2008 2009 Million litres China 17544 18516 19545 Japan 67362 68031 68732 Thailand 11205 13222 15602 South Korea 17442 19570 22157 Vietnam 6957 7964 8917 India 5030 5523 6166 Philippines 7925 7974 8030 Taiwan 4818 4899 4796 Hong Kong 2249 2322 2404 Indonesia 1510 1683 1879 Malaysia 1287 1314 1351 Singapore 554 577 605 Other Asia Pacific 11692 14088 17350 TOTAL 31347 33232 35344 US billion Japan 504 509 515 China 144 150 155 South Korea 45 50 55 Thailand 14 17 20 Taiwan 22 22 30 Hong Kong 17 17 18 India 08 10 11 Vietnam 08 09 10 Malaysia 11 11 12 Singapore 10 10 10 Philippines 09 09 09 Indonesia 04 04 05 Other Asia Pacific 16 19 22 TOTAL 813 836 872 20 Million litres China Japan Thailand South Korea Philippines Taiwan Hong Kong Indonesia Malaysia Singapore Other Asia Pacific TOTAL US billion Malaysia Singapore Philippines Indonesia Other Asia Pacific TOTAL Source Euromonitor Table 14 Forecast Sales of Beer by Country 0 6 analysis J n Thailand Philippines Taiwan Hong Kong Indonesia Malaysia Singapore Other Asia Pacific TOTAL 6 value South Korea 2007 Nuquot m H m 100 62 17 N H m 4 m m m N m m w o O O O O H N H N w 4 2010 20840 76265 18723 22817 9700 6914 8093 4877 2493 2098 1397 640 22008 38442 H m N O O H H H H H m N w m 4 w m 2008 NOquot H o m 0 O O O H N H N w 100 60 17 N H m 4 w H 4 H m 0 w 4 l 4 m m w H N H m m H m 4 m 4 2009 i U l H w w 0 O O O H N H N m N H m 4 H m 4 m m H H m 1000 590 178 2011 22233 70216 22468 23336 10383 7752 8163 5015 2596 2332 1448 678 27825 40454 H m m 0 O H H H H H m N w 4 m m w m m H N N H w H m m 0 N w LA 2010 H w H w H O O O O H N H N m N H m m m H m m m w m N 1000 603 17 0 1000 2012 23969 7028 2696 2380 1094 866 824 517 270 260 151 01w 0 N m m 0 O m H N H 3564 L m H w 01H 0 H H H H H H m m w 4 m m w w w H 4 O N m m m m N H m m N w Analysis 2007 2012 2011 2012 m m m g H 4 H m m m CJO O O H N H N m KH m m N O m m m m H O CJO O O H H N N m N m m m N m 0 w H N H w m w m ON 100 567 549 181 185 0 21 Lager will remain by far the largest sector in both volume and value terms in all national markets throughout the forecast period with growth being underpinned by substantial increases in the consumption of economy lager in national markets such as Thailand and Taiwan the region39s key national market in volume terms will drive regional sales of lager China Thailand Taiwan Hong Kong dia Vietnam Malaysia Singapore Philippines Indonesia Other Asia Pacific TOTAL Source Euromonitor Table 15 Forecast 0 6 growth South Korea Singapore Hong Kong Malaysia Taiwan Japan Philippines Other Asia Pacific TOTAL local currency constant value Thailand Taiwan South Korea China Singapore Hong Kong Malaysia Japan Philippines Source Euromonitor cgtH H H H F N N H L NNuaOOqu cgtH H H H F N N N U H N e H N H q o 0 2 1000 1000 Sales of Beer 20072012 CAGR cgtH H H H F N m N GxH N m N ugto m N 100 by l 01w 0 O H m m w m m w w 0 m m m m m m e e m m m N m H m a a m e m e a m N OHNNWgtJgtUWQ 24 32 19 13 12 12 11 10 06 29 3 1000 100 Country cgtH H H H F N m m 10 N m m U o m o cgtH H H H F N w m 10 N m m 10 m m a e m Growth 20072012 20072012 Total The expected strong performance of economy lager in China helping it to maintain its absolute dominance by 2012 and premium lager ln value terms with nearly 93 of total volume beer sales The lower levels of disposable income in real terms and economic disparities between urban and rural areas in China will limit the scale of growth of both standard Economy lagers will thus remain the dominant type the 22 standard lager subsector will see healthy growth maintaining its importance in national markets such as Hong Kong Indonesia India Singapore and the Philippines Similar to the case in other regions where lager is dominant dark beer is predicted to be the fastest growing sector over the forecast period Robust growth will come from a very low consumer base and increasing sales will mainly be the result of the wider availability of dark beer through horeca channels Despite predicted growth sales of dark beer will remain relatively insignificant at a regional level by 2012 Stout will experience fairly modest growth over the forecast period at nearly 4 in volume and just under 2 in value terms Positive rowth will be registered in countries such as China Indonesia and South Korea although again this will be from a very low base Stout will thus remain very much a niche product across the region Nonlow alcohol beer will see sales follow a similar pattern to that recorded during the review period remaining relatively unpopular across the region Aside from the fact that Asian consumers have not yet developed an interest in such beer a lack of product availability and product promotion is the main contributing factor to the slow development of the sector Expected sluggish growth in Japan the key national market in the region for nonlow alcohol beer will negatively influence the sector39s performance at a regional level between 2007 and 2012 Table 16 Forecast Sales of Beer by Sector 2007 2012 Forecast sales by sector volume and value 2007 2008 2009 2010 Million litres Lager 30892 32760 34845 37894 Premium lager 29606 31111 32819 37557 Standard lager 88474 93097 98676 10671 Economy lager 19084 20339 21695 23467 Dark beer 2297 2422 2630 3044 Stout 1448 1488 1540 1607 Nonlow alcohol 807 816 823 830 beer TOTAL 31347 33232 35344 38442 US billion Lager 771 795 830 913 Premium lager 213 22 1 232 272 Standard lager 360 36 3 369 395 Economy lager 198 21 0 228 247 Dark e 18 19 19 20 Stout 16 16 17 17 Non low alcohol 07 07 07 07 beer TOTAL 813 83 6 87 2 95 7 200704 2011 2012 CAGR Million litres Lager 39862 43046 69 Premium lager 35742 37509 48 Standard lager 11087 11902 61 Economy lager 25201 27393 75 Dark beer 3417 3900 112 Stout 1671 1746 38 Non low alcohol 837 843 09 beer TOTAL 40454 43695 69 US billion Lager 893 922 36 Premium lager 252 258 39 Standard lager 384 391 1 6 23 Economy lager Source Euromonitor OHNU 11gt 1 l 3qu IOONLA OHmm 0000mm 24 BEER IN WESTERN EUROPE BEER WESTERN EUROPE Market Overview Introduction This report analyses the market for beer in Western Europe For the purposes of the study the market has been divided into four sectors Lager Dark beer Stout k Nonlow alcohol beer Much of the information in this report is of a statistical nature and whilst every attempt has been made to ensure accuracy and reliability Euromonitor cannot be held responsible for omissions or errors The forecasts given are estimates based on the state of the market at the time of writing and the most reliable sources of information available Figures in tables are calculated from unrounded data and may not sum BEER IN WESTERN EUROPE Market Overview Main Findings The beer market in Western Europe is very mature with consumption falling over the review period in a number of major national markets including Germany and the UK However in 2007 the UK and Germany saw volume sales recover slightly which combined with growing demand for beer in less developed national markets such as Turkey was sufficient to produce modest volume growth at a regional level Total beer sales in Western Europe amounted to around 31 billion litres in 2007 marginally up over the previous year In value terms the regional beer market was worth over US107 billion in the same year down slightly on 2006 An increase in consumption of wine in some countries negatively affected sales of beer in Western Europe during the review period Consumer preoccupation with health matters including dieting also impacted on sales as did stricter drink driving legislation introduced towards the end of the review period in certain countries Germany generated the greatest volume sales in Western Europe throughout the review period However despite a strong tradition of beer drinking Germany saw a reduction in consumption between 2003 and 2007 Government campaigns regarding the detrimental effects of excessive alcohol consumption undoubtedly had a negative effect on beer sales Lager was by far the largest sector in the beer market in the region in both volume and US terms with sales amounting to around 25 billion litres and US85 billion in 2007 Premium lagers were the most dynamic within the sector with sales rising by nearly 2 in volume terms in 2007 as consumers traded up across the region paying increasing attention to the quality of beer they were drinking Glass was by far the most popular packaging format throughout the review period as it is the traditional packaging format for lager in most national markets The keg format took a higher share in Western Europe than it did in other regions such as Asia Pacific or Latin America as draught beer remains very popular through the horeca channel in Western Europe Many countries have a strong indigenous pub culture which ensures the popularity of draught beer Heineken was the regional market leader in Western Europe in 2007 commanding a volume share of 9 up slightly over the previous year Heineken39s healthy performance derived from its strength in the premium lager subsector The company39s recent marketing strategy has seen it increasingly focus on its premium brands across the region Supermarketshypermarkets continued to generate the greatest volume sales through the retail channel in 2007 underpinned by the ongoing concentration of the retail sector across the region Retailers39 brands maintained their regional volume share in 2007 but found it increasingly difficult to make progress against the major brands due to the prevailing trend favouring premium beers Euromonitor forecasts that beer sales in Western Europe will see only marginal growth in both volume and real value terms over the forecast period with market maturity being the principal factor counting against substantial levels of growth although certain sectors such as stout should enjoy more dynamic growth between 2007 and 2012 While standard lager will continue to be the most important subsector premium lager will remain the key sector for brewers intent on maximising profits BEER IN WESTERN EUROPE Market Background Legislation The alcoholic drinks industry in Western Europe is closely regulated by individual national governments As a result there is wide ranging legislation governing the manufacturing distribution and importing of alcoholic drinks as well as of course their consumption Unlike the case with other regions however there is little significant variation in legislation across the region given the influence of the EU Nevertheless there are some significant variations between countries with regard to particular aspects of the beer industry Production in Germany Domestic legislation regarding production can constitute a significant barrier for companies wishing to enter a particular market For example in Germany domestic beer manufacturers still adhere to the quotReinheitsgebotquot Purification Law Despite the fact that the 1516 Purification Law was abolished recently brewers still follow it on voluntary basis According this ancient law beer can only be produced from certain natural ingredients such as hops malt water and wheat Thus no chemicals can be added during the production process As a consequence industry sources indicate that brewers attempting to enter the German beer market who do not adhere to this law may face severe difficulties in terms of consumer acceptance of their products Age Restrictions All countries have age restrictions for alcoholic drink consumption in Western Europe however the age range varies from country to country In Denmark for example it is illegal to sell beverages containing more than 12 ABV to anyone under the age of 15 In Spain by contrast alcohol may be legally purchased and consumed by persons aged 16 years and over Consumers may be obliged to prove their age by producing their national identity card in order to purchase alcoholic beverages However this is not strictly enforced and it is still considered relatively easy for under age consumers to purchase alcoholic drinks particularly in shops BEER IN WESTERN EUROPE Market Background Taxation Generally speaking countries in the north of the region apply significantly higher taxes to beer than those from the south with countries such as Spain and Portugal featuring the lowest rates although Italy is an exception to this rule Taxation is perhaps the most complex and controversial issue in the alcoholic drinks industry in the EU as excise systems and rates vary considerably from country to country within the community This lack of harmonisation of the EU excise systems tends to favour some countries resulting in cross border trading Lower rates of tax on beer in France have for example encouraged considerable legal and illegal cross border activity with the UK in recent years UK based brewers are currently campaigning for the introduction of a European standard which would eradicate this type of competition Since the abolition of duty free sales across the EU smuggling across the channel into the UK has escalated The scale of the problem estimated by Customs amp Excise statistics is substantial with over 75 of beer crossing the channel being bought for further resale in the UK Such activity is illegal and is classified as smuggling The high level of duty paid in the UK in comparison to mainland Europe is of course the main reason for this smuggling However the UK is not an isolated case and similar situations occur between for instance Denmark and Germany with Danes crossing the border to shop at German supermarkets for similar reasons Some countries in Western Europe have a special tax rate for beer which affects the consumption of beer due to consequent high retail and horeca prices The Spanish government for example levies a Special Beer Tax on beer sales The companies are taxed at source and pay Ptas1395 to the state for every litre sold The amount levied has risen substantially in recent years with the 2007 figure representing a rise of 29 over 2006 levels Since beer taxation is now levied at a fixed rate per litre it is in the interests of brewers to push their higher priced brands since they are more profitable In addition to this beer tax VAT is levied at 16 on all types of beer in Spain including non or low alcoholic beer The inclusion of beer among the list of products which have a special tax levied on them reduces its competitiveness in relation to other alcohol based products such as wine which are not liable to such a tax The beer industry39s competitiveness was further weakened by the reduction of VAT on soft drinks from 16 to 7 BEER IN WESTERN EUROPE Table 1 Sales TaxVAT on Beer by Country 2007 o 6 of sales price 2007 Denmark 250 Norway 230 Finland 220 Belgium 210 Ireland 210 France 206 Austria 200 Italy 200 Netherlands 175 175 Germany 160 Spain 160 Turkey 150 Sweden 120 Greece 80 Switzerland 75 Portugal 50 Source Euromonitor from Official Statistics BEER IN WESTERN EUROPE Market Background Consumer Expenditure on Beer Towards the end of the review period total retail consumer expenditure on beer showed a steady decline in major markets across Western Europe Germany featured the highest retail consumer expenditure throughout the review period As a result of the decline in consumer expenditure in Germany regional levels of expenditure suffered Austria the country with the highest proportion of expenditure on beer out of total retail spending on alcoholic drinks also saw consumer expenditure on beer fall during the review period Reduced levels of tourism was a major factor in reducing expenditure on beer in some countries such as Austria as was previously mentioned cross border shopping with levels of tax on beer higher in Austria than nearby countries Additionally beer is considered something of an old fashioned drink by young people in Austria which resulted in lower levels of consumption by this key segment of the population Turkey the least developed market in the region saw a substantial increase in retail spending on beer during the review period although this was from a low base Despite being a Muslim country the growth in tourism combined with the influence of international drinking trends on younger consumers boosted sales Countries such as France which are traditionally wine drinking featured by far the lowest levels of spend on beer out of total alcoholic drinks39 expenditure BEER IN WESTERN EUROPE Table 2 Retail Consumer Expenditure on Beer 2003 2007 US million 2003 2004 2005 2006 2007a Germany 80257 78170 66973 64639 62764 UK 25357 32053 46060 41582 41166 Italy 15762 18066 16386 16702 17053 Belgium 18873 17802 15117 14979 14919 Netherlands 14673 14132 12583 12532 12745 France 14012 13885 12166 12032 11852 Denmark 12287 12016 11205 11231 11197 Spain 7267 7595 9636 10087 9895 Finland 11464 1074 3 9945 9699 9272 Austria 12343 1166 0 9503 9405 9123 Norway 8385 884 2 8570 8529 9075 Sweden 9962 9763 8764 8542 9055 Turkey 2163 3347 3768 4761 5180 Switzerland 4902 459 4 3878 3919 3833 Portugal 3240 3551 3511 3872 3771 Ireland 3030 346 8 3139 2956 3098 Greece 1194 1412 1484 1120 1194 TOTAL 24517 25110 24269 23659 23519 Source Euromonitor from National Statistics Note a estimate BEER IN WESTERN EUROPE e 3 Retail Consumer Expenditure on Beer as of Total Alcoholic Drinks Retail Consumer Expenditure 2003 2007 value 2003 2004 2005 2006 2007a Austria 556 54 8 54 3 543 533 Germany 532 51 4 50 7 49 6 494 Denmark 523 50 5 50 0 49 7 489 Norway 489 48 7 48 2 47 9 472 Netherlands 439 43 1 43 2 42 1 421 Turkey 381 43 6 37 8 38 9 409 Finland 431 42 3 42 4 41 5 404 Belgium 419 40 0 36 9 36 3 362 Greece 344 34 0 34 2 33 2 337 Sweden 318 30 1 30 7 30 6 305 Ireland 334 32 9 32 0 31 2 305 Portugal 303 30 7 30 6 30 6 303 Spain 303 30 7 30 6 30 6 298 Italy 29 7 30 1 30 0 29 7 294 UK 16 8 19 5 24 7 20 9 199 Switzerland 202 19 7 19 5 19 7 197 France 56 5 5 5 4 5 3 51 Source Euromonitor from National Statistics Note a estimate BEER IN WESTERN EUROPE Market Background Per Capita Consumption Per capita beer consumption in Western Europe decreased by over 1 litre between 2003 and 2007 Countries experiencing the sharpest decline included Germany Austria Denmark and Belgium all traditional beer drinking cultures The sharp increase in consumption in Ireland along with moderate growth in the Netherlands Spain Greece and Turkey failed to offset the effects of this decline at a regional level Ireland saw the highest levels of consumption in the region Surprisingly the same country also saw the fastest increase in per capita consumption up by over 23 litres between 2003 and 2007 This came about principally as a result of a booming economy changing demographic profile increased tourism and the arrival of skilled workers from outside the country BEER IN WESTERN EUROPE Table 4 Beer Consumption by Country 2003 2007 Litres per head 2003 2004 2005 2006 2007 Ireland l585 l637 l695 l755 l8l8 Germany l356 l3l4 l304 l280 l289 Austria 1154 1137 1126 110 2 108 8 Denmark 1205 118 1 1139 108 3 101 9 Belgium 1040 101 3 1007 98 3 99 0 UK 955 94 0 935 93 9 94 0 Netherlands 868 84 5 863 87 4 88 3 Finland 814 79 6 811 79 1 79 1 Spain 644 65 3 663 68 1 67 6 Switzerland 620 61 0 611 60 5 60 0 Sweden 646 59 9 619 57 5 58 9 Portugal 580 57 8 580 58 6 58 8 Norway 52 7 52 8 533 50 2 51 3 Greece 48 7 48 1 484 49 1 49 9 France 39 1 39 6 387 38 1 37 8 Italy 25 3 23 9 254 26 4 27 0 Turkey 9 4 10 0 108 11 2 12 4 Other Western Europe 514 499 486 474 471 TOTAL 690 677 672 670 674 Source Official statistics trade associations trade press company research store checks trade interviews Euromonitor estimates BEER IN WESTERN EUROPEzmarket Background Drinking Habits Beer is a traditional alcoholic drink in most northern European markets while wine tends to be the traditional drink across southern Europe National pride and well established indigenous traditions dictate consumption habits with regard to beer in many countries across Western Europe Belgium for example is one of the major beer producing and exporting countries in Europe Belgian people are very proud of Belgian beer which is famous both nationally and internationally In Belgium beer means lager but it comes in many varieties with the tradition that each type is served in a differently shaped glass Beer is by far the most frequently consumed alcoholic drink enjoyed by both women as well as men although men tend to drink more There is no social stigma attached to drinking beer within limits and after lunchtime so that it is an everyday drink and the fact that it is alcoholic is perceived as being secondary The price of different alcoholic drinks such as wine and beer also affects consumption habits in some countries In Denmark for example leaving aside the fact that Danes share a similar pride in their beer to Belgians beer is normally a considerably cheaper option than wine and is therefore more popular with people in lower income brackets Local brands such as the now internationally renowned Carlsberg and Tuborg brands remain the national favourites The popularity of beer has dipped slightly however as a result of an increase in wine drinking On the other hand sales of spirits have experienced an even sharper decline than beer in recent years By contrast France which is known as a major wine producing and exporting country consumes far more wine than beer Per capita beer consumption stood at around 37 litres in 2007 less than half the quantity consumed in the UK Different habits of consumption in various parts of France complicate the situation somewhat Beer is most frequently drunk in the north of France although in Brittany and Normandy it is traditional to drink cider TnFrench cities demand is growing for speciality beers mainly from younger consumers Germans along with the British have one of the strongest beer drinking traditions in Western Europe The quality of German beer is a matter of national pride Annual beer festivals such as the one in Munich attract huge numbers of visitors from all over Germany as well as abroad In the south weilt217gtbier a light yeasty beer is very popular and southerners living in other parts of Germany typically drink it Indeed there is a strong regional tradition regarding the type of beer consumed in Germany In terms of the people who typically drink beer in Germany female consumption rates are only around half that of men Women tend to opt for healthier low alcohol beers and female consumption of low and non alcohol lager is very close to that of male consumers although the sector remains very much a niche area even in Germany Levels of income also have impact on choice of beer in Germany While consumption of lager is highest among lower income groups consumption of wheat beer and nonlow alcohol beer increases with income level However trading up when it occurs in Germany is more likely to take the form of beer being replaced by wine rather than one type of beer being replaced with anot e BEER IN WESTERN EUROPE Market Background Advertising Alcohol advertising remains a focus of discussion in EU countries as tobacco TV advertising is now prohibited by the EU Commission Brewers keep a close eye on the possible future modification of legislation and tend to adjust their advertising strategies to fit developments In Germany advertisements do not have to warn of the health dangers involved in alcohol abuse in the same way as tobacco advertisements However efforts were made not to allow advertising to appear to appeal to teenagers Companies are very conscious of the fact that they cannot simply rely on the weather to sustain sales and have therefore focused their efforts on using advertising sponsoring and horeca promotions to stimulate demand The review period saw advertising expenditure in Germany increase by around 44 In terms of sports sponsorship the most money was spent on football Formula I ice hockey and tennis In France legislation concerning the advertising of alcoholic drinks has had a significant impact the market The Evin law which came into effect in January 1991 prohibited the advertising of alcohol of over 12 ABV on television in books aimed at children or at sporting venues Non creative advertising of alcohol is permitted in the press and on billboards although with the stipulation that the advertisement must carry a message warning consumers of the dangers of alcohol consumption to the health finishing with the slogan consommer avec moderation quotconsume in moderationquot In January 1993 further measures came into effect prohibiting the sponsorship of events by alcohol producers as well as advertising on the radio when children are likely to be listening that is before 5pm on weekdays BEER IN WESTERN EUROPE Market Background Drink driving Drink driving legislation has a profound effect on alcohol consumption in many countries across Western Europe including the UK and Germany Many countries lowered the drink driving limit as road accidents caused by drink driving increased In Denmark for example the drink driving limit was lowered from 08ml per litre blood alcohol level to 05ml per litre in 2006 After initial worries many Danes learnt that they would still be able to drive after the traditional lunchtime beer In the UK as road traffic built up and drink related accidents increased more resources were put into enforcing the law lower limits were placed on alcoholic consumption and penalties increased in severity Drink driving legislation had two effects on alcohol consumption in the UK It contributed to a reduction in the amount of alcohol consumed through the horeca channel as drivers kept their consumption within legal limits or substituted their preferred drink for a non alcohol drink Sales of non low alcoholic beers did not benefit as this type of beer is generally perceived to be an expensive option in comparison to soft drinks The second major effect was to encourage alcohol consumption in the home to the detriment of the on trade but considerably boosting retail sales In Germany stricter laws came into effect in 2003 Anybody found driving a motorised vehicle with more than 25mg per 1000ml of alcohol on their breath or 50mg per 1000ml in their bloodstream faces an immediate fine penalty points or both Various media campaigns have been run to publicise the new law Many brewers regarded the new law as an opportunity to market an alcohol free version of their major brands although again there was no dramatic increase in acceptance of these products with drivers preferring abstinence or soft drinks BEER IN WESTERN EUROPE Market Size by Country The market for beer in Western Europe stood at around 31 billion litres in 2007 having seen a marginal increase over 2006 Value sales reached around US107 billion in the same year down slightly over the previous year The main factors influencing market performance included the maturity of key national markets increasing concern about health issues and the cannibalisation of sales by other types of drink both alcoholic and non alcoholic The general profile of the market in 2007 suggests that in the majority of markets consumption is stagnant or declining and this is being compensated r to a certain extent by consumers trading up to premium beers Germany is by far the largest national market in volume terms accounting for over a third of total regional volume sales in 2007 In spite of a decline in sales between 2003 and 2007 Germany saw some positive progress in the final year of the review period in both volume and local currency constant value terms mainly due to substantial increases in adspend as a result of the millennium celebrations Germany39s lead in terms of volume sales was of course underpinned by its large population which represented around 18 of the total population in Western Europe Though Germany had the second highest beer per capita consumption in the region in 2007 it was still down over previous years Growing concern about health issues and the cannibalization of sales by other forms of alcoholic beverage principally wine were the main contributory factors behind this fall although the lowering of the alcohol limit for drink driving may also have had a negative effect In sharp contrast to the situation regarding volume sales the UK generated the most value sales over the review period with around 18 of total regional value sales This was of course largely due to tax although many UK drinkers began trading up to premium lagers during the review period which boosted value sales Certain British consumers also developed the habit of selecting beer for specific drinking occasions Volume sales received an expected boost during the World Cup period in 2003 although the combination of poor weather and the short period of time covered by the tournament stifled more substantial or sustained growth As the least developed market in Western Europe Turkey was the fastest growing national market in the region in 2007 with sales up around 10 in both volume and local currency constant value terms This growth came in spite of the fact that around 90 of the population in Turkey is Muslim However wholesale rejection of alcohol consumption tends to be relaxed outside the older quarters of cities such as Istanbul However with the lowest per capita consumption in the region at only 12 litres in 2007 Turkey remains a market affected by Islamic prohibitions about alcohol consumption In fact much of the impetus behind the recent boom in the beer market has come from fast rising levels of tourism which have resulted in a significant increase in the number of horeca outlets allowed to sell alcohol in the country Another key factor has been the growing 39westernisation39 of younger consumers who tend to ape drinking patterns from more developed European markets Interestingly Ireland with the highest per capita consumption in Western Europe throughout the review period continued to see consistent volume growth in 2007 This rise can be partly attributed to the inward migration of skilled workers from both the EU and US attracted by Ireland39s booming economy during the 1990s which encouraged higher levels of spend through the horeca channel A changing demographic profile with the numbers of younger consumers rising also gave a boost to beer consumption This key consumer group tends to spend more time and money going out drinking than older generations With Ireland39s economic prosperity leading to increased levels of disposable income and buoyant consumer confidence people generally spent more time and money out of home enjoying themselves Other national markets including Belgium Finland and Portugal experienced moderate levels of growth in 2007 However certain national markets such as Spain Switzerland and Austria saw a decline in sales in the same year Although there were divergent trends in terms of growth the difference between the gains and the losses with a few notable exceptions previously mentioned were not dramatic This reflects the fact that the market for beer is generally mature across most countries Competition from wine is probably the major factor in declining sales especially in countries which are traditionally beer drinking nations In Denmark for example many consumers are switching from beer to wine As a consequence the country recorded the sharpest fall in beer sales in 2007 down by nearly 7 in volume terms over the previous year BEER IN WESTERN EUROPE Table 5 Sales of Beer by Country 2003 2007 2003 2004 2005 2006 2007 Million litres Germany 11097 10780 10700 10501 10574 UK 55943 55270 55151 55533 55746 Spain 25239 25630 26089 26816 26650 France 22681 23119 22709 22462 22462 Italy 14498 13756 14585 15191 15517 Netherlands 13461 13167 13521 13779 14013 Belgium 10513 10274 10243 10021 10115 Austria 9290 9163 9088 8903 8807 Turkey 5827 6334 6874 7461 8305 Ireland 5630 5837 6066 6300 6550 Portugal 5701 5671 5697 5755 5770 Denmark 6283 6199 6009 5735 5412 Greece 5090 5039 5081 5167 5266 Sweden 5670 5283 5487 5117 5265 Switzerland 4376 4321 4335 4303 4274 Finland 4156 4080 4172 4083 4099 Norway 2285 2299 2331 2204 2264 Other Western Europe 985 971 965 941 944 TOTAL 30860 30421 30540 30478 30720 US billion UK 253 248 264 269 266 Germany 306 291 258 242 235 Spain 117 120 109 110 107 France 94 91 80 79 78 l 65 66 65 68 69 Belgium 52 49 43 42 42 Netherlands 42 40 37 38 39 Ireland 33 35 35 35 36 Greece 35 35 33 32 34 Austria 36 34 30 29 28 Finland 30 28 26 24 23 Sweden 26 26 23 22 23 Portugal 27 26 23 23 22 Switzerland 24 23 20 20 19 Norway 17 17 16 15 16 Denmark 17 16 14 14 14 Turkey 09 09 12 12 13 Western Europe 05 05 04 04 04 TOTAL 1187 1161 1093 1077 1070 Source Official statistics trade associations trade press company research store checks trade interviews Euromonitor estimates BEER IN WESTERN EUROPE Table 6 Sales of Beer by Country Analysis 2003 2007 2003 2004 2005 2006 2007 volume analysis Germany 360 354 350 345 344 UK 181 182 181 182 181 Spain 82 84 85 88 87 France 73 76 74 74 73 Italy 47 45 48 50 51 Netherlands 44 43 44 45 46 Belgium 34 34 34 33 33 Austria 30 30 30 29 29 Turkey 19 21 23 24 27 Ireland 18 19 20 21 21 Portugal 18 19 19 19 19 Denmark 20 20 20 19 18 Greece 16 17 17 17 17 Sweden 18 17 18 17 17 Switzerland 14 14 14 14 14 Finland 13 13 14 13 13 Norway 07 08 08 07 07 Other Western Europe 03 03 03 03 03 TOTAL 1000 1000 1000 1000 1000 value analysis UK 213 214 242 250 249 Germany 258 250 236 225 220 Spain 98 103 100 102 100 France 79 79 73 74 73 Italy 55 57 60 63 65 Belgium 44 42 39 39 39 Netherlands 35 34 34 35 36 Ireland 28 30 32 32 34 Greece 29 30 31 29 31 Austria 31 30 27 27 26 Finland 25 24 24 23 22 Sweden 22 23 21 20 22 Portugal 23 23 21 21 21 Switzerland 20 20 18 18 18 Norway 14 15 15 14 15 Denmark 14 14 13 13 13 Turkey 08 08 11 11 12 Other Western Europe 04 04 04 04 04 TOTAL 1000 1000 1000 1000 1000 Source Euromonitor Table 397 Sales of Beer by Country Growth 2003200397 20032007 20032007 20062007 CAGR TOTAL volume growth Turkey 113 93 425 Ireland 40 39 163 Sweden 29 180 710 Norway 27 020 0 90 Italy 21 17 70 Greece 19 09 35 Netherlands 17 10 41 Belgium 09 1 00 3 80 Germany 07 1 20 4 70 Finland 04 0 30 1 40 UK 04 0 10 0 40 Portugal 03 03 1 2 France 00 0 20 100 Spain 0 60 1 4 56 Switzerland 0 70 0 60 2 30 Austria 1 10 1 30 5 20 Denmark 560 370 139 Other Western Europe 03 110 420 TOTAL 08 010 050 local currency constant value growth Turkey 88 2 42 4 Sweden 55 100 3 90 Ireland 44 45 193 Norway 39 12 47 Netherlands 29 23 97 Italy 13 18 75 Greece 12 04 15 Germany 08 1 60 6 10 Belgium 07 0 40 1 80 Switzerland 04 00 0 1 03 13 5 1 France 0 20 100 4 00 030 200 760 Austria 090 170 660 Portugal 230 220 850 Denmark 240 280 107 Finland 400 330 127 Source Euromonitor BEER IN WESTERN EUROPE Market Size by Sector Lager is by far the largest sector in the Western European beer market accounting for around 80 of total volume sales during the review period Lager is traditionally the most popular type of beer in Germany the region39s largest market where it accounted for around 80 of volume and 81 of value sales in 2007 Lager is also traditionally the preferred type of beer across southern Europe which is largely due to the climate Given the size and historical importance of the lager sector competition is fierce and tends to focus on price While standard larger remains the most important subsector sales of premium lager did especially well across the region during the review period particularly in national markets such as Ireland Italy the Netherlands Sweden and the UK In the Netherlands for example there was a rapid development of seasonal or specialist brand extensions by such manufacturers as Heineken and Grolsch Improved product mixes by the major brewers increasing the proportion of premium brands in their product portfolios had the objective of boosting profitability With consumption levels stagnating across the region brewers were left with clear objective of focusing marketing efforts on pushing premium higher margin beers As a result sales of economy lager suffered falling by around 1 in volume and 3 in value in 2007 Stout which is far from being a traditional beverage in many countries recorded the most robust growth across the region with sales up by around 3 in both volume and value terms in 2007 alone Positive growth was registered in national markets such as Italy Greece and the Netherlands during the review period In Italy for example an increase in international travel among younger consumers allowed Italians to familiarise themselves with more exotic types of beer and this provoked a certain amount of aspirational drinking at home with Irish themed pubs notably increasing in number Heavy product promotion including dispensing explanatory leaflets at both pubs and bars also contributed to growing demand Progress in stout sales must however be put in perspective with growth coming from a very low base Dark beer experienced a modest increase in volume sales in 2007 helped by positive performances in Austria Ireland the Netherlands and Turkey Value growth was however stifled by competition on price and promotional activity especially through the horeca channel Similarly to stout dark beer is not a traditional drink in many nationa markets especially across southern Europe where consumers tend to be rather conservative in their tastes Wheat based dark beer increased in popularity in Austria during the review period where most dark beer is sold through horeca outlets The popularity of microbreweries and the increased number of dark beer brands coming onto the market also helped the sector generally although outside countries where there is a 10 specific tradition of drinking dark beer especially in countries with a warm climate Nonlow alcohol beer terms years the product continued to occupy a niche Sale of this type of beer have been declining in including Belgium Denmark drinking soft drinks instead Italy and the Netherlands be competition from other types of non alcoholic drinks Even the introduction of stricter drink driving legislation in many countries failed to secure growth for nonlow alcohol beer with consumers simply electing not to drink or in volume and over 4 many national markets for several The main problem seems to especially types of soft drink BEER IN WESTERN EUROPE Table 8 Sales of Beer by Sector Million litres Lager Premium lager US billion Lager Premium lager Standard lager Economy lager Dark beer Stout Nonlow alcohol beer TOTAL Million litres Lager Premium lager Standard lager Economy lager Dark beer Stout Nonlow alcohol US billion Lager Premium lager 2003 24585 93641 13136 20844 43776 9663 9312 30860 I LotomtomHugt 2006 24420 94683 12978 19740 42600 9609 8370 2004 24266 93624 12996 19078 43418 9423 8711 30421 I 400N00me 2007 24602 96322 13022 19473 42968 9978 8237 2005 24432 94728 12903 20565 43071 9524 8490 30540 1093 20062007 0 6 growth OHO l4 LAJO Omtoomqq l6 the smallest sector in Western Europe was also the worst performing one in 2007 with sales down by around 2 in value 20032007 Source Official statistics trade associations trade press company research store checks trade interviews Euromonitor estimates BEER IN WESTERN EUROPEzPackaging Glass was the most popular packaging format throughout the region over the review period accounting for around 50 of total volume sales Bottled beer dominates sales in most national markets including Belgium Finland Greece Italy Spain and Portugal Belgium saw the highest proportion of sales of bottles in 2007 at 90 which was mainly due to technical requirements from brewers as certain beers including so called 39white39 beers are fermented in glass containers The belief is that glass helps preserve the specificity of top fermented traditional beers Keg was the second most popular packaging format in Western Europe accounting for over 28 of total beer sales in 2007 reflecting the importance of the horeca channel for the distribution of beer across the region Higher levels of disposable income in Western Europe means that consumers can afford to eat and drink out on a more frequent basis than their counterparts in Eastern Europe for example In addition pubs and restaurants across Western Europe have the facilities and technology to provide draught beer which some catering establishments in poorer regions such as Latin America find prohibitively expensive Ireland held the highest proportion of sales through the keg format reflecting not only importance of the horeca channel in the country but also an overwhelming preference for draught beer although kegs lost share steadily to other formats over the review period This was largely attributable to the rapid development of retail sales which helped boost the popularity of the can format The can format increased its share by three percentage points over the review period taking share from glass bottles in the retail channel helped by technical advances in the quality of can packaging Cans were particularly popular in national markets such as Spain Germany Sweden and the UK Sweden featured the highest levels of penetration in 2007 despite the fact that the format was losing ground to glass which benefited from growing demand for quality beers which tend to be packaged in glass bottles Plastic is a relatively novel packaging format across the region and it had a negligible presence in most major national markets In France the 33 Export brand from Heineken was launched in a 50cl PET version in December 2006 through Continent hypermarkets Having proved successful by 2007 the manufacturer was planning to develop and sell a larger format BEER IN WESTERN EUROPE Table 9 Sales of Beer by Country and Packaging Format Analysis 2007 o volume analysis Plast Can Glass ic Keg Others TOTAL Austria 11 5 555 330 1000 Belgium 10 0 900 1000 Denmark 684 316 1000 Finland 56 722 222 1000 France 91 641 33 235 1000 Germany 229 574 20 177 1000 Greece 190 730 80 1000 Ireland 144 76 780 1000 Italy 89 744 167 1000 Netherlands 95 715 190 1000 Norway 166 726 10 3 05 1000 Portugal 80 720 200 1000 Spain 380 288 332 1000 Sweden 605 267 0 3 125 1000 Switzerland 62 600 338 1000 Turkey 150 730 100 20 1000 UK 285 124 01 588 02 1000 Other Western Europe 211 497 10 TOTAL 211 497 10 Source Euromonitor BEER IN WESTERN EUROPE Market Shares Heineken was the market leader in Western Europe in 2007 accounting for nearly 9 of total regional volume sales marginally up over the previous year The Dutch based manufacturer is present across the region with both the Heineken and Amstel brands increasing their share in markets such as Belgium Denmark France Ireland and Switzerland where demand for premium beer was robust over the review period The leading brand overall in the region Heineken benefited from this trend increasing its lead in 2007 Despite weaker performances in Italy and the Netherlands in 2007 Heineken maintained a substantial presence in both countries In its domestic market Heineken accounted for around 37 of total volume sales in 20062007 with its value share and profitability greatly improved Major marketing efforts included shifting its product mix more towards premium positioned beers across the region as a whole a move which it supported through high profile promotional initiatives across several major national markets In addition in the Netherlands special events such as the limited edition launch of the Heineken Millennium Magnum 3 litre bottles of Heineken were specifically designed to keep Heineken in the public eye at all times Danone Divests Groupe Danone SA was the second largest brewer in Western Europe in 2007 with key brand Kronenbourg 1664 second behind Heineken accounting for just under 3 of total regional volume sales in the final year of the review period Danone performed reasonably well in 2007 with its regional share underpinned by its strength in markets such as Belgium France and Spain A relatively weak performance in its own domestic market in 2007 was offset by gains made in the UK in the same year However the company began to divest much of its European brewing business at the beginning of 2005 to focus on core business areas which include dairy products bottled water and biscuits As part of this strategic decision Danone39sFrench based Brasseries Kronenbourg SA was sold to Scottish amp Newcastle in May 2005 Carlsberg Carlsberg39s regional share was down slightly in 2007 largely due to a poor performance in Spain However strong performances in Denmark Finland and Italy prevented a greater fall in its share at a regional level Carlsberg39s major brands included Carlsberg and Carlsberg Export with flagship brand Carlsberg the sixth most popular beer in the region in 2007 Carlsberg was particularly strong in its domestic market Denmark where its various subsidiaries accounted for over half of the total volume sales in 2007 Despite intense competition from other brewers the company managed to increased its volume share slightly in 2007 aided by its well established and comprehensive distribution network Industry sources commented that Carlsberg39s powerful position in the Danish market allowed it to get the upper hand when it came to dealing with retailers The strength of its distribution network as well as its powerful core product portfolio allowed the Danish brewer to sell speciality beer and thus dominate all sectors of the market It was also the driving force in the market in terms of innovations with novelty type products and packaging becoming increasingly important to attract consumers39 attention Private Label The penetration of private label is higher in Western Europe than any other region in the world mainly due of course to the sophistication of the retail sector as well as the level of competition between individual retailers Supermarkethypermarket chains thus enjoy a powerful bargaining position with brewers across the region which allows them to get private label products manufactured Private label thus had an appreciable share of sales in national markets with a sophisticated retail infrastructure including Denmark France Germany the UK and Austria Denmark represented the extreme in terms of private label share with retailers39 brands generating around a third of total volume sales in 2007 Private label products can be 13 found in all sectors in the country but unsurprisingly they tend to dominate the economy beer subsector Of course as a general rule their key competitive advantage is price which in a market where taxes on alcohol are relatively high makes them an attractive option for consumers Germany saw an increase in private label volume sales in 2007 particularly in niche sectors such as dark beer stout and nonlow alcohol beer A weak economy during the latter part of the review period depressed consumer confidence in Germany which made private label products more attractive especially when consumers wished to experiment with niche products The powerful position occupied by hard discounters such as Lidl and Aldi in the German retail sector also undoubtedly contributed to growth in private label sales However the further penetration of private label brands was impeded by price cutting from major brewers who responded quickly to the threat and attempted to maintain brand equity in the fact of competition from retailers BEER IN WESTERN EUROPE Table 10 Company Shares of Beer 2006 2007 0 6 share 2006 2007 Heineken NV Groupe Danone SA Carlsberg AS Interbrew SA Bass Plc Diageo Plc Binding Brauerei AG Brau und Brunnen AG Anadolu Group Holsten Brauerei AG Private label l l NNNWWU QUD HNNNLMWLMgtJgtQW Ln Ln 0 rr 7 D H m Uquot Uquot ONmmwmwm U NOq Ln 5 OmootonoomU qmooo TOTAL l00 H O O Source Euromonitor BE R IN WESTERN EUROPE Distribution Retail vs Horeca Trends The horeca channel generated slightly higher volume sales than retail outlets across Western Europe in 2007 a profile different to developing regions such as Eastern Europe and Asia Pacific and due to the relatively high levels of disposable income characteristic of most Western European markets Of course the other major factor was the existence of strong indigenous beer drinking cultures in many markets especially in Northern Europe In countries such as the UK Ireland and Germany pubs and beer drinking is a traditional way to socialise with either friends or family The image of the traditional pub as a kind of 39community centre39 in these countries has however started to change Towards the end of the late l990s the UK for example saw an increase in the number of modern style 39themed39 pubs usually located in relatively wealthy areas targeting specific consumer groups traditionally outside the core pub going community Ireland provides a typical example of a Northern European beer drinking culture with the highest proportion of horeca sales in the region at 87 of total volume sales in 2007 Public houses have traditionally been central to Irish drinking culture and remain the most popular place to go for a pint of beer In a similar vein to the situation in the UK Ireland also recorded significant growth in the number of bars particularly in cities such as Dublin which cater to a younger more fashion conscious clientele than 14 most traditional pubs These bars were certainly a factor in driving up sales through horeca outlets and particularly sales of new trendy imported premium beers Of course economic prosperity and higher disposable incomes are also playing a role in the growth of horeca sales in Ireland with people feeling increasingly free to go out and spend money on non essential items such as alcohol and entertainment The most popular locations in the summer for Germans to drink beer are the numerous Biegarten beer gardens which attract all segments of the population Traditionally the German Biergarten has to feature three elements benches placed underneath chestnut trees Beer is usually served in a 1 litre Mass beer mug and is sold in draught from huge barrels of the lifestyle of its population and the first beer of the day can be consumed as early as 10am together with pretzels or Weisswurste white sausages Greece featured the highest proportion of value sales through the horeca channel where it accounted for over 92 of total market value in 2007 which was much higher than the regional average This was partly due to the annual influx of tourists who generate a considerable proportion of horeca sales Moreover native Greeks tend to experiment with more expensive imported beers when they go out products at home where wine is more commonly drunk Younger consumers in Greece also increasingly socialise in cafes bars and clubs which further supports horeca sales However a consequence of the 39brand experimentation39 prevalent in Greece is that there is little brand loyalty through the horeca channel BEER IN WESTERN EUROPE Table 11 Retail versus Horeca Sales of Beer by Country Analysis 2007 Retail Horeca TOTAL volume Ireland 130 870 1000 Greece 219 781 1000 Spain 285 715 1000 UK 292 708 1000 Portugal 365 635 1000 Belgium 386 614 1000 Switzerland 488 512 1000 Denmark 513 487 1000 Austria 560 440 1000 Turkey 563 437 1000 Germany 598 402 1000 Italy 600 400 1000 Netherlands 636 364 1000 France 679 321 1000 Finland 714 286 1000 Norway 720 280 1000 Sweden 795 205 1000 Other Western Europe 450 550 1000 TOTAL 496 504 1000 value Greece 74 926 1000 Ireland 86 914 1000 Spain 114 886 1000 UK 184 816 1000 Belgium 198 802 1000 Switzerland 201 799 1000 Portugal 220 780 1000 Austria 235 765 1000 Germany 240 760 1000 beer available as self service and the consumption of food brought from elsewhere The Biergarten is especially important in Bavaria where it is an important part given that they do not often consume such Italy 267 733 1000 France 298 702 100 0 Netherlands 392 608 100 0 Denmark 409 591 100 0 Turkey 433 567 100 0 Sweden 467 533 100 0 Norway 524 476 100 0 Finland 525 475 1000 Other Western Europe 28 8 71 2 1000 TOTAL 232 768 1000 Source Euromonitor BEER IN WESTERN EUROPE Distribution Retail Distribution Patterns Supermarketshypermarkets were unsurprisingly the most important retail distribution format for sales of beer across Western Europe during the review period Multiple grocers increased their share at expense of small independently owned outlets which are included in the quotother food storesquot category Specialists outlets also lost out to the major grocery chains between 2003 and 2007 as the consolidation of the retail sector across the region meant substantial gains in share of sales for the major retailing groups The large size of outlets such as hypermarkets gives them a strong competitive advantage when it comes to the sale of beer Shelf space allows these outlets to stock a wide range of beers in large packs which combined with the attractiveness of one stop shopping and provision of car parks means that it is very convenient for consumers Economies of scale of course also allow multiplies to promote beers on a regular basis as well as offer competitive prices through their stronger bargaining power The emergence and growth of private label brands in many national markets further increased the share taken by multiplies The outlets grouped together in quotother food storesquot remained the second most popular retail format in the region taking around 21 of total retail volume sales in 2007 These types of outlets were most important in less developed national markets such as Turkey where they accounted for 54 of total retail sales in 2007 However the consolidation of the retail sector is also apparent in Turkey with supermarkets gaining ground rapidly doubling their share of sales over the 5 year review period Specialist stores also lost ground to supermarkets over the review period losing around eight percentage points at a regional level between 2003 and 2007 Germany the largest national market in Western Europe saw a notable decrease in the number of specialist stores in 2007 having seen continuous growth since 2001 This was largely due to the fact that hypermarket and discounter chains began to adopt the concepts characteristic of these specialist suppliers Discount stores achieved appreciable shares of retail sales in countries such as Norway Switzerland Germany and Italy Norway registered the highest proportion of sales through discount stores where such retail outlets are often situated outside city centres requiring a car for access The high price of alcoholic drinks in Norway means that taking the trouble to visit these outlets is worthwhile in terms of money saved The variety of formats grouped together under quotothersquot generated the least volume sales in the region accounting for just over 2 of total retail sales in 2007 This category includes petrol stations which account for a relatively higher proportion of sales in Sweden where standard lager was increasingly available through such outlets as it is often purchased on impulse BEER IN WESTERN EUROPE Table 12 Retail Sales of Beer by Distribution Format and by Country Analysis 2007 retail volume SH OF SP DI Others TOTAL Austria 890 50 50 10 1000 Belgium 820 105 20 55 1000 Denmark 514 235 59 127 65 1000 Finland 710 100 160 30 1000 France 720 120 38 104 18 1000 Germany 437 316 113 134 1000 Greece 716 159 117 08 1000 Ireland 425 35 540 1000 Italy 485 220 135 160 1000 Netherlands 745 150 105 1000 Norway 530 100 03 367 1000 Portugal 740 40 140 20 60 1000 Spain 720 110 49 92 29 1000 Sweden 310 80 290 120 200 1000 Switzerland 280 380 20 270 50 1000 Turkey 120 540 340 1000 UK 590 130 240 2 0 2 0 1000 Other Western Europe 529 164 214 73 20 1000 TOTAL 540 214 126 99 21 1000 Source Euromonitor Key SH Supermarketshypermarkets OE Other food outlets BEER IN WESTERN EUROPE BEER WESTERN EUROPE Market Forecasts by Country The beer market in Western Europe is expected to amount to over 32 billion litres by 2012 with a forecast volume CAGR of just over 1 between 2007 and 2012 Although key markets will see consumption stagnate or decline over the forecast period due to maturity the regional market will be saved by expected strong growth in less developed countries such as Turkey In real value terms growth at a regional level will be more disappointing with fierce competition between brewers and the increasing stranglehold of multiple grocers on distribution combining to hold down prices Germany and the UK will maintain their respective positions as the largest national markets in volume and value terms Germany39s key position in the region will remain crucial due not only to its large population but to the continuing strong beer drinking culture which will benefit from higher levels of consumer confidence as the Euro strengthens against the US and other major currencies Further consolidation within the industry in Germany along with the spread of regional beers across the country will further aid growth as prices rise Consumption levels though will continue to suffer as other alcoholic drinks specifically wine continue to cannibalise sales Turkey will be the fastest growing national market in the region in the years to come carrying on from the dynamic growth levels seen during the review period Growth will be from a relatively low base as the country still had the lowest level of per capita beer consumption in the region in 2007 Although religion and tourism are complicating factors in Turkey beer consumption among certain segments of the population is expected to increase with younger consumers apeing their coevals in other more developed European markets Demographic trends will also make a positive contribution to overall market growth in Turkey in the longer term Approximately a third of Turkey39s population was under the age of 14 during the review period This is important regarding future market growth potential as younger consumers are much more susceptible to marketing and promotional activity than older generations Despite the expected growth in demand in Turkey among the general population consumption of premium beer will still be limited to affluent consumers given low average levels of disposable income Some national markets including Switzerland France Belgium and Denmark will see an ongoing decline in volume sales of beer over the forecast period Denmark will continue to feature the sharpest decline in the region due to a general switch from quantity to quality with premium beers benefiting despite the fact that overall levels of consumption will fall Health issues will also be a factor in Denmark as they will be in 17 most other national markets across the region with beer finding itself at a competitive disadvantage compared to wine which will continue to cannibalise sales in many traditional beer drinking markets BEER IN WESTERN EUROPE Table 13 Forecast Sales of Beer by Country 2007 2012 2007 2008 2009 Million litres Germany 10574 10630 10664 UK 55746 56097 56399 Spain 26650 26675 27053 France 22462 22454 22407 Italy 15517 15809 16162 Netherlands 14013 14224 14446 Turkey 8305 9288 10420 Belgium 10115 10164 10065 Austria 8807 8813 8831 Ireland 6550 6785 7021 Portugal 5770 5770 5744 Sweden 5265 5300 5352 Greece 5266 5320 5375 Denmark 5412 5313 5216 Switzerland 4274 4270 4277 Finland 4099 4101 4107 Norway 2264 2322 2372 Other Western Europe 944 954 968 TOTAL 30720 30996 31286 US billion 266 266 267 Germany 235 236 238 Spain 107 109 110 Ital 69 71 73 France 78 78 78 Netherlands 39 40 41 Ireland 36 38 39 Belgium 42 42 42 Greece 34 34 34 Austria 28 28 29 Sweden 23 24 24 Portugal 22 22 22 Finland 23 23 23 Turkey 13 14 15 Switzerland 19 19 19 Norway 16 17 17 Denmark 14 13 13 Other Western Europe 04 04 05 TOTAL 1070 1080 1091 2010 2011 2012 Million litres Germany 10729 10792 10846 UK 56672 56955 57267 Spain 27504 28067 28717 France 22311 22294 22241 Italy 16477 16811 17143 Netherlands 14659 14887 15113 Turkey 11718 13198 14863 Belgium 9889 9666 9521 Austria 8862 8894 8927 Ireland 7272 7534 7806 Portugal Sweden Greece Denmark Switzerland Finland Norway Other Western Europe TOTAL USS billion Germany Netherlands Ireland Belgium Greece Austria Sweden Portugal Finland Turkey Switzerland Norway Denmark Other Western Europe TOTAL Source Euromonitor o 6 volume analysis Germany UK Spain France Italy Netherlands Turkey Belgium Austria Ireland Portugal Sweden Greece Denmark Switzerland Finland Norway Other Western Europe TOTAL value analysis UK Germany Spain 2007 100 24 10 cgtH H H H H H N N m N e w u lm mddwi Wwdmi Wdl LA H H mmmmoqmmmtommHNtomHou OOHHNHNNNNWJgtJgtJgt 2008 2009 343 341 181 180 86 86 72 72 51 52 46 46 30 33 33 32 28 28 22 22 19 18 17 17 17 17 17 17 14 14 13 13 07 08 03 03 100 0 1000 24 7 244 21 9 218 10 1 101 H H 20 l LAJ 0040 100 24 10 OHi i i i i NNUJU JbbLT Q F O H H H H N N N m m e e e 4 1w m m w m m m m o m m m m m u 10 mm mqqmmmHQQNquw LA 1 WOHHHNNNNWLOgtJgtJgtJgtQ mmmmom mem mw H H BEER IN WESTERN EUROPE Table 14 Forecast Sales of Beer by Country Ana1ysis 2011 2012 33 33 mmmmqu mOHmmommq OOLAJLAJQQOOOgtJgt1O1LAOOGJgt cgtH H H H H H N N m e e w cgtH H H H H N N N N e e w 0 LA 0 LA 1000 1000 240 237 101 102 20072012 Italy France Netherlands Ireland Belgium Greece Austria Sweden Portugal Finland Turkey Switzerland l l l l NNNNWWWWQQ mmeNHNmeemmw l l l l NNNNWWWWQQ Nmmwml le QU QNQ l l l l NNNNWWWWQQ NmOOgtJgt Olll Olll l l l l NNNNWWWWQQ NmmmHoNququm l l l l NNNNWWWWQQ deml l WQHOOOOQOUD l l l l NNNNWWWWQQ NQQQHHLMQHWUDUDUDO Other Western Europe 0 TOTAL 1000 1000 1000 1000 1000 100 s o s o s o s o s o o S Source Euromonitor Table 15 Forecast Sales of Beer by Country Growth 20072012 20072012 CAGR 20072012 TOTAL 0 6 volume growth Turkey 123 79 0 Ireland 36 19 2 Portugal 22 11 5 Italy 20 10 5 Norway 20 10 5 Sweden 17 9 0 Netherlands 15 78 Spain 15 78 Greece 08 39 Germany 05 26 UK 05 27 Austria 03 14 Finland 01 06 Switzerland 010 0 50 France 020 1 00 Belgium 1 20 5 90 Denmark 140 660 Other Western Europe 14 7 0 TOTAL 11 5 7 local currency constant value growth Turkey 83 492 Ireland 41 224 Netherlands 28 149 Italy 26 138 Norway 26 138 Sweden 24 127 Austria 17 85 Portugal 17 88 Spain 14 73 Germany 08 40 Greece 08 42 Belgium 07 37 02 10 Switzerland 01 07 Finlandl 00 00 France1 00 02 Denmark 050 220 Other Western Europe TOTAL Source Euromonitor Note 1 growth below 005 l N NU Ln to BEER IN WESTERN EUROPE Market Forecasts by Sector Lager will remain by far the largest sector in Western Europe in 2012 featuring a modest CAGR of just over 1 in volume terms between 2007 and 2012 While sales of standard and economy lager will stagnate premium lager will see more substantial growth with a CAGR of almost 2 This subsector will be particularly dynamic in countries such as Ireland the Netherlands and Sweden Of these the Netherlands will see the most growth with sales expected to rise by over 55 in volume terms over the 2007 2012 period Several factors will contribute to this growth Firstly increasing prosperity will see Dutch consumers increasingly switch to premium beers especially imported beers Secondly the ageing Dutch population is expected to consume less in terms of quantity but more in terms of quality as tastes in beer becomes more sophisticated In line with the general maturity of the market and the stagnation of consumption brewers will increasingly push premium products which allow them to take higher margins There is also expected to be considerable innovation in terms of both products themselves and packaging and this will further underpin growth in premium products Stout will continue to be the best performer in the Western European beer market over the forecast period with sales expected to feature a CAGR around 2 in volume terms Greece Italy and the Netherlands will see particularly good performances from the stout sector although progress will be from a low base In Greece for example sales of stout will benefit from consumer trends favouring imported beer and novelty products especially among younger consumers The fact that in markets like these stout is perceived very much as a premium product encourages aspirational drinking which will undoubtedly benefit brewers of stout over the forecast period Dark beer will make very little progress over the forecast period with a CAGR of under 1 in both volume and constant value terms What growth there will be at a regional level will be underpinned by positive performances in Denmark Ireland the Netherlands and Turkey While older consumers in the Netherlands continue to favour dark beers Turkish consumers along with tourists are expected to experiment more with dark beers although the climate in the country obviously counts against any substantial growth in the long term as do local drinking habits and low levels of disposable income Nevertheless brewers and distributors in Turkey are expected to launch more brands targeting the increasingly 39westernised39 younger generation who are expected to remain the principal consumers of novelty products such as stout and dark beer The nonlow alcohol beer sector will remain the smallest sector over the forecast period exhibiting stagnant volume growth and a decline in constant value terms Nevertheless at a country level there will be relatively strong growth in sales in countries such as Portugal Spain and Turkey although this will be insufficient to compensate for the expected steep decline in sales in markets such as the UK the Netherlands Greece and Germany Industry sources indicate that the lack of promotion of such products places them in a disadvantage especially when compared to alternative non alcoholic products such as soft drinks In the UK for example the sector will continue to be adversely affected by consumers39 perception that these products are over priced and deficient in terms of taste BEER IN WESTERN EUROPE Table 16 Forecast Sales of Beer by Sector 2007 2012 2007 2008 2009 2010 Million litres Lager 24602 24820 25056 25341 Premium lager 96322 97993 99389 10111 Standard lager 13022 13080 13172 13277 Economy lager 19473 19406 19454 19526 Dark beer 42968 43283 43569 43853 21 Stout Nonlow alcohol US billion Lager Premium lager Standard lager Economy lager Dark beer Stout Nonlow alcohol eer TOTAL Million litres Lager Premium lager Standard lager Economy lager Dark beer Stout Nonlow alcohol beer TAL US billion Lager Premium lager Standard lager Economy lager Dark beer Stout Nonlow alcohol Source Euromonitor 9978 8237 30720 84 39 42 2 15 Hto mm m 2011 25666 10281 13423 19617 44265 10951 8315 32019 88 42 43 2 15 HU anooHLn 10287 8185 30996 85 4O 42 2 15 2012 26038 10457 13613 19680 44695 11145 8416 32464 89 43 44 2 15 H H m w H w OHH H ONOOOHH NQDNQQH LAJO OOU quN HQOOmHHOO 10754 8239 31626 87 41 43 2 15 HgtJgtL L L LAJLAJ
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