Global market review of premium beer – forecasts to 2015 2009 edition

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Global market review of premium beer – forecasts to 2015

2009 edition October 2009

By Mark Newton and Ashley Cairns

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Table of contents

Table of contents Single-user licence edition.......................................................................................................... ii Copyright statement ............................................................................................................... ii Incredible ROI for your budget – single and multi-user licences ............................................. ii just-drinks.com membership .................................................................................................. iii Table of contents ........................................................................................................................ iv List of tables .............................................................................................................................. vii Chapter 1 Major developments in 2008 and 2009 ...................................................................... 1 Worldwide effect of the economic downturn ........................................................................... 1 Global marketing – music, sport, product innovation, responsible drinking and the internet .... 2 Global market overview.......................................................................................................... 4 Chapter 2 Premium beer defined ................................................................................................ 5 The category by core brands.................................................................................................. 6 Budweiser...................................................................................................................... 6 Carlsberg (Pilsner) ......................................................................................................... 6 Stella Artois ................................................................................................................... 6 Foster’s ......................................................................................................................... 6 Tuborg ........................................................................................................................... 6 Castle ............................................................................................................................ 6 Miller (Genuine Draft) .................................................................................................... 7 Coors (Original/Light)..................................................................................................... 7 Heineken ....................................................................................................................... 7 Amstel ........................................................................................................................... 7 Carling ........................................................................................................................... 7 Michelob ........................................................................................................................ 7 Harbin ............................................................................................................................ 8 Brahma .......................................................................................................................... 8 Skol ............................................................................................................................... 8 Corona .......................................................................................................................... 8 Baltika ........................................................................................................................... 8 Holsten .......................................................................................................................... 8 VB (Victoria Bitter) ......................................................................................................... 8 Crown ............................................................................................................................ 9 Peroni Nastro Azzurro ................................................................................................... 9 Molson ........................................................................................................................... 9 Grolsch .......................................................................................................................... 9 Sol ................................................................................................................................. 9 Dos Equis ...................................................................................................................... 9 Super Bock .................................................................................................................... 9 Cristal ............................................................................................................................ 9 Guinness ..................................................................................................................... 10

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Table of contents

Asahi Super Dry/Black ................................................................................................. 10 Sapporo ....................................................................................................................... 10 Yebisu ......................................................................................................................... 10 Chapter 3 The major global markets ........................................................................................ 11 Europe ................................................................................................................................. 12 Africa ................................................................................................................................... 12 North America ...................................................................................................................... 12 Latin America ....................................................................................................................... 13 Continental Asia ................................................................................................................... 13 Oceania ............................................................................................................................... 13 Chapter 4 The premium beer market by region ....................................................................... 14 Africa ................................................................................................................................... 14 Overview ..................................................................................................................... 14 Key markets ................................................................................................................ 15 The Americas....................................................................................................................... 17 North America.............................................................................................................. 17 Overview ............................................................................................................... 17 Key markets .......................................................................................................... 18 Latin (Central/South) America ...................................................................................... 20 Overview ............................................................................................................... 20 Key markets .......................................................................................................... 21 Continental Asia ................................................................................................................... 23 Overview ..................................................................................................................... 23 Key markets ................................................................................................................ 24 Oceania ............................................................................................................................... 25 Overview ..................................................................................................................... 25 Key markets ................................................................................................................ 27 Europe ................................................................................................................................. 28 Overview ..................................................................................................................... 28 Key markets ................................................................................................................ 30 Northern/Western Europe ..................................................................................... 30 Southern Europe ................................................................................................... 32 Eastern Europe ..................................................................................................... 34 Chapter 5 The producers........................................................................................................... 36 A-B InBev ............................................................................................................................ 36 Company profile .......................................................................................................... 36 Global marketing strategies ......................................................................................... 37 Key global brands ........................................................................................................ 37 Carlsberg ............................................................................................................................. 38 Company profile .......................................................................................................... 38 Global marketing strategies ......................................................................................... 38 Key global brands ........................................................................................................ 38 Foster’s ................................................................................................................................ 39 Company profile .......................................................................................................... 39 Global marketing strategies ......................................................................................... 39 Key global brands ........................................................................................................ 40

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Table of contents

SAB Miller ............................................................................................................................ 40 Company profile .......................................................................................................... 40 Global marketing strategies ......................................................................................... 41 Key global brands ........................................................................................................ 41 Heineken ............................................................................................................................. 41 Company profile .......................................................................................................... 41 Global marketing strategies ......................................................................................... 42 Key global brands ........................................................................................................ 42 Molson Coors....................................................................................................................... 42 Company profile .......................................................................................................... 42 Global marketing strategies ......................................................................................... 43 Key global brands ........................................................................................................ 43 FEMSA ................................................................................................................................ 43 Company profile .......................................................................................................... 43 Key global brands ........................................................................................................ 43 Unicer .................................................................................................................................. 44 Company profile .......................................................................................................... 44 Key global brands ........................................................................................................ 44 Diageo ................................................................................................................................. 44 Company profile .......................................................................................................... 44 Key global brands ........................................................................................................ 44 Asahi ................................................................................................................................... 45 Company profile .......................................................................................................... 45 Key global brands ........................................................................................................ 45 Sapporo ............................................................................................................................... 45 Company profile .......................................................................................................... 45 Key global brands ........................................................................................................ 45 Chapter 6 Other beer debates ................................................................................................... 46 Beer and globalisation ......................................................................................................... 46 Beer, politics and health ....................................................................................................... 46 Case study – Scottish (UK) legislation ......................................................................... 47 Chapter 7 Conclusions .............................................................................................................. 49

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List of tables

List of tables Table 1: Total global beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) ......................................................................................................... 4 Table 2: Africa total beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) ....................................................................................................... 14 Table 3: The Americas total beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) ................................................................................................ 17 Table 4: North America total beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) ................................................................................................ 18 Table 5: Central Americas total beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) ....................................................................................... 20 Table 6: Latin America total beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) ................................................................................................ 21 Table 7: Asia total beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) ............................................................................................................... 23 Table 8: Oceania and developed Asia total beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) ..................................................................... 26 Table 9: Europe total beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) ....................................................................................................... 29 Table 10: Northern/Western Europe total beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) ..................................................................... 30 Table 11: Southern Europe total beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) ....................................................................................... 32 Table 12: Eastern Europe total beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) ....................................................................................... 34

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Chapter 1 Major developments in 2008 and 2009

Chapter 1 Major developments in 2008 and 2009 Worldwide effect of the economic downturn The ‘credit crunch’ and global recession has significantly affected all major markets. US overall total beer market sales growth halved during 2008 (to xxx%) with many major brands seeing volumes fall by as much as xxx%. Europe has seen similar declines with the effects in emerging Eastern European territories such as Russia being even more significant – A-B InBev posting a third quarter beer volume decline of xx% (against a like for like volume increase of xx% in 2007). Carlsberg volumes in Russia also fell x% during the same period.

Developing markets such as Latin America and Asia (primarily China) have also seen growth slow or plateau with some countries, such as Colombia, seeing significant declines.

Four of the top eight international brewers listed in the previous edition of this report have now come together to create a new landscape in the international brewing industry – further mergers or takeovers cannot be ruled out as rationalisation and consolidation of the marketplace continues apace. ○

InBev and Anheuser-Busch agree to combine as A-B InBev in July 2008: o

A-B InBev now one of the top five consumer product companies in the world

o

Budweiser to be the combined company flagship brand

o

Combined global volume (based on 2007) predicted at xxxm hectolitres

o ○

Combined revenues (Based on 2007) predicted at US$xxxxbn

Heineken and Carlsberg buy S&N for US$xxxxbn in January 2008 o

Heineken own S&N UK operations and in Portugal, Ireland, Finland and Belgium

o

Carlsberg take full control of BBH (Baltika)

o

Carlsberg acquire S&N assets in France, Greece and Asia (Vietnam and China)

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Chapter 2 Premium beer defined

Chapter 2 Premium beer defined There is no universally agreed answer to what defines premium beer. One widely used definition is any beer that commands a price premium of xx% (or above) against the benchmark mainstream (or standard beer) in the marketplace.

ABV is another widely used indicator. Many brands recognised as premium beers (such as San Miguel, Stella Artois and Budweiser) are x% ABV or above. However, a new sub category of ‘x% premium’ brands – including Amstel and Beck’s Vier complicate things yet further.

The BBPA (British Beer and Pub Association) categorises packaged lager by a system of four classes based on alcohol content – premium beers come under Classes III and IV: ○

Class III – lagers of between xxx%-xxx% ABV

○

Class IV – Super strength lagers of xxx% ABV or above

Packaging, marketing and consumer perception also have a role in the positioning of brands within the market place. Perceived quality, provenance and strength of product can all play a part – imported beers also often have an additional ‘cachet.’

The sales data shown in this and previous reports includes both the off-trade (i.e. retail sales) and the on-trade (sales through hotels, pubs, clubs and restaurants).

The definition of premium beer used in this report has been specifically kept the same as that used in our previous two reports, for purposes of comparability.

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Chapter 3 The major global markets

Chapter 3 The major global markets The world’s markets can be grouped in a number of different ways. For the purpose of this report it is simpler to quantify the world in markets with broadly similar economic characteristics and maturity. Additionally political stability as well as religious preferences or dominance need to be taken into consideration.

In creating the six markets the overriding consideration has been economic market status as the beer industry is predominantly consumer led and thus forms a part of general consumer spending.

Europe is the most complex region and sub-divides into three distinct geographies: ○

Northern Europe hosts the most developed economies and the most mature beer market

○

Southern Europe broadly has developed economies and mature but still growing beer markets

○

Eastern Europe (including Russia) are developing economies with developing beer markets

Asia divides into two and along similar lines to Northern and Eastern European markets: ○

Developing Asia contains the powerhouse fledgling economies of India and Chinese Peoples Republic, as well as those of Indo-China. Within the confines of this broad market are included most of the Muslim countries that are essentially “dry” although the presence of beer is seen in locally agreed enclaves in some states

○

Developed Asia and Oceania are dominated by Japan and the ANZAC countries

Africa stands out geographically. There are developed countries, such as South Africa and the southern Mediterranean nations such as Morocco.

Continental America subdivides into two along mostly economic lines: ○

US and Canada (North America) are the established economies

○

Central and South America (Latin America) are developing economies

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Chapter 4 The premium beer market by region

Chapter 4 The premium beer market by region Africa

Overview Africa remains a major resource for the global alcoholic drinks producers. However, a number of significant issues remain demographically. North Africa (Morocco, Algeria, Egypt, etc) are predominantly Muslim countries and as such the supply and consumption of alcohol is restricted. Emerging markets in developing central African nations such as Cameroon, Ghana, Nigeria and Kenya offer significant opportunity although local brands and traditional drinks still hold sway. The most developed economy – South Africa – remains a significant marketplace where the effects of the global economic recession are being balanced somewhat by the investment from upcoming global sports events such as the FIFA Football World Cup.

It should also be noted that a large portion of the African on-trade for premium beers is dominated by the international hotel sector, along with central and international government agencies to a lesser extent.

Table 2: Africa total beer (premium and standard variants) sales volume, 1997-2015 (BBL and pints per head) 1997 Actual Total all beer - BBL

xxxxxxxxxx

2012

2015

xxxxxxxxxxx

xxxxxxxxxxx

xxx%

xxx%

xxxx%

xxx%

Annual growth

xxx%

xxx%

xxx%

xxx%

xxxx

xxxx

xxxxx

xxxxx

xxxxx

% Chg

-xxx%

-xxx%

xxx%

xx%

Annual growth

-xxx%

-xxx%

xxx%

xxx%

Actual Population Estimates all aged 15+

xxxxxxxxxx

2007

% Chg

Actual Total all beer - Pints per Head (15+) pa

xxxxxxxxx

2002

xxxxxxxxxxx

xxxxxxxx

xxxxxxxxxx

xxxxxxxxxx

xxxxxxxxx

% Chg

xxxx%

xxxx%

xxxx%

xxx%

Annual growth

xxx%

xxx%

xxx%

xxx%

Source: CGA, just-drinks

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Chapter 5 The producers

Chapter 5 The producers A-B InBev

Company profile

The merger of Anheuser-Busch and InBev NB in November 2008 was the latest, and possibly greatest, of a number of high profile consolidations within the brewing industry over the last few years. Ultimately xx% of Anheuser Busch shareholders voted to bring the two companies together to create the world’s biggest brewer. “We are about to sell more beer to more people in more countries than any other company in the history of brewing beer,” August A. Busch IV said. A-B InBev is now the world’s largest brewing company (with revenues of EURxxxxbn in 2008) and also one of the top five consumer products companies – holding the number one or number two position in over xx key markets. Importantly it now has a presence in the majority of developed and developing markets.

The global headquarters of the newly unified company is based in Leuven, Belgium, with A-B InBev collectively employing over xxxxxxx people in more than xx countries worldwide. The company works through six main operational zones: North America, Latin America North, Latin America South, Western Europe, Central & Eastern Europe, and Asia Pacific – which manage a portfolio of over xxx brands including flagship brands Budweiser, Stella Artois and Beck’s. There is also a diverse range of growing multi-country brands like Leffe and Hoegaarden, and strong ‘local’ brands such as Skol, Brahma, Quilmes, Michelob, Harbin, Cass, Klinskoye, Chernigivske, and Jupiler. Additionally, the company owns half of Grupo Modelo, Mexico’s leading brewer and owner of the Corona brand, and a xx% share in China brewer Tsingtao – the country’s best-selling premium beer.

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Chapter 6 Other beer debates

Chapter 6 Other beer debates Beer and globalisation As the global industry becomes dominated by an ever decreasing number of major international businesses, cross fertilisation is becoming an every day reality for a number of key brands. Foster’s for example had a licensing agreement with S&N UK for Western Europe which has now been inherited by Heineken (essentially a direct competitor of Foster’s in a number of other global markets). Equally, the purchase of major or total stakes in major brewing businesses in developing economies such as China and Eastern Europe is providing these companies not only with a solid entry vehicle into the local markets, but also export opportunities as the international interest in global ‘world beer’ brands increases.

The success of Asian brands such as Tiger in the mature Northern European markets suggest that the appetite for exotic or unfamiliar beers continues to increase as a counterbalance to established options. Through licensing agreements or acquisition, these brands have the advantage of inclusion within the increasingly portfolio approach of the major brewers – offering retailers and operators complete drinks category management and far greater commercial accessibility.

Beer, politics and health Health issues regarding the misuse of alcohol are taking on a global importance as the lead taken by the developed nations is followed by emerging economies such as China and India. The World Health Organisation, which passed an Alcohol Abuse Resolution – entitled “strategies to reduce the harmful use of alcohol” – in May 2008, has now answered concerns over the problem in developing countries. The annual meeting of the Health Assembly (covering all WHO’s xxx member states and the main policy and decision-making body of the organisation) concentrated on a need to curb alcohol problems, mainly in developing countries. The primary concern of the assembly was to balance the issues of alcohol abuse and associated health and social problems with a desire to

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Chapter 7 Conclusions

Chapter 7 Conclusions The good news is that in spite of the worldwide recession global consumption of beer is forecast to increase by over x% up to 2015 overall. However, this doesn’t tell the whole story. There a number of significant regional differences that make-up the final total figure. Declines in mature markets such as Northern Europe and Australasia are balanced by the growth in developing economies, particularly in China and India. The simple fact is that beer remains (along with spirits and wine) one of the most popular alcoholic drinks in the world and there is still a relatively static mature and significant potential future marketplace for both standard and, more importantly, premium products.

The fight for new and developing markets is being helped further by the increasing rationalisation and globalisation of the brewing industry. Over the last couple of years alone there have been a number of major mergers and acquisitions that have changed the face of global business. Companies such as A-B InBev now have access to more markets than ever before and its portfolio of brands (from Budweiser to Brahma, Hoegaarden to Harbin) covers all the global regions.

Over the course of the reporting period, health concerns over alcohol related harms have become an international issue. The WHO now has a coordinated global strategy which is aimed at ensuring all countries look towards providing a balanced legislative framework for the sale of alcohol. In the UK, the Scottish parliament is still working towards a coordinated minimum pricing strategy for alcohol which could have significant effects, especially on the heavily discounted off-trade market.

Although the consumption of premium, and therefore more expensive, products has been hit short-term by the global economic downturn, the interest in this category has probably never been higher – especially in developing markets where they are seen as aspirational purchases. In places like Kenya and Mexico the younger demographic is tapping into imported premium beers especially in on-trade purchasing situations. In more mature markets, such as North America and the UK, there has also been a parallel increased interest in craft brews and more esoteric imported ‘world’ beers – this has helped to

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