World: Underlying beer and brewing major trends

World beer sales totaled 157.8 billion liters in 2005 with the top 10 companies accounting for approximately 60% of global volume of branded beer.

Although twenty large multinational and regional producers head the industry tables on branded beer volume, small production dominates total beer production when “commodity” beer products are considered (“commodity” beer is 62% of total beer production), the International Center for Alcohol Policies provided on its March 2006 report.

Although the largest global brewers have significant international production, their brands are essentially local. Due to its large volume, beer is generally produced in the country in which it is consumed.

International brands, when available outside their “home” countries, are usually produced locally either by a brewery established by the brand owner or under license by a local brewery.

Exports are important only for a few countries with prominent brands (e.g., Heineken, Carlsberg, Stella Artois or Guinness), which are produced by some of the world’s largest brewing companies.

Over the past five years, changes in beer consumption patterns have varied by region. In low and middle-income countries, the main developments have been shifts from consumption of unrecorded, locally produced beer to commercial, regional brands.

Also noteworthy in low and middle-income countries is the shift to beer from other beverage alcohol categories (primarily from unrecorded and “commodity” spirits).

In the developed regional markets of North America and Western Europe, volume sales have declined, or, at best, remained static over the past few years. This has been due to a combination of continued maturation of the market and intensified competition from wine and spirits.

Another trend in developed countries is an emphasis on more expensive premium brands and specialty beers.

On the corporate front, global brewers have been stepping up foreign investment, mainly in the form of strategic alliances with local manufacturers (particularly in Brazil, Russia, India, and China, the socalled BRIC countries). Industry consolidation continues with the leading global brewers acquiring major stakes in leading regional companies.

Just a few examples of recent consolidation and investment activity in 2005 bears out these trends: SABMiller acquired the leading Colombian brewer Bavaria, which includes major interests in neighbouring countries in Central and South America; Heineken made four significant acquisitions in Russia, where it now has nearly 14% of the market share; InBev completed its transformation as the leading volume producer with the merger between Interbrew of Belgium and AmBev of Brazil; Carlsberg has acquired a stake in a Cambodian company, developed a greenfield investment in China and plans to build a brewery in Vietnam; Scottish & Newcastle has made significant investments in India and Russia.

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