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Heineken’s loss reflects 5 percent decline in beer and cider industry over 2020, says GlobalData

April 27, 2020Pretty Much a Press Release

global beer decline

With the majority of bars and pubs worldwide still closed to consumers, beer manufactures have struggled to shift their sales back into retail to offset their losses and even big brands such as Heineken are no exception – having reported a 14 percent decline in beer sales in March. The lockdown is a difficult landscape for industry players, both large and small, according to GlobalData, a leading data and analytics company.

GlobalData expects the beer and cider industry to stand at a global value of $595.6 billion in 2020, reflecting a forecasted year-on-year (YoY) decline of 5% between 2019 and 2020. This is in stark contrast to a baseline growth of 3.2% expected over the same period, which suggested continued robust growth before COVID-19.

Carmen Bryan, Consumer Analyst at GlobalData, commented: “The closure of pub and bar channels is only part of the story behind the industry’s inevitable decline. Supply and manufacturing disruptions, limited exports and consumer unrest has also contributed to the current scenario. However, the popularity of beer as a staple in many households holds promise for the industry.”

In GlobalData’s Coronavirus (COVID-19) Tracker Consumer Survey, 73% of respondents from 11 countries surveyed stated that they drink alcohol, demonstrating a sizeable consumer base that remains active through online and brick and mortar retail.

It is likely that the beer industry will see a significant rebound immediately after social distancing recommendations are lifted, in which consumers splash out on their missed opportunities. The challenge will then be in rebooting production capabilities to meet the rapid surge in demand.

Bryan continues: “Recent years have seen the beer industry transform with craft and low alcohol by volume (ABV) offerings becoming mainstream. With consumer demand for these and more varieties of innovative beer and cider offerings only growing, it’s enduring popularity is likely to remain. This will help stabilize sales and reignite production after the pandemic.”

The years following the pandemic are a different story, however. With many nations suffering from reduced economic output and consumer confidence expected to fall considerably, it is likely that the long-term effects of this turbulent few months will result in increased budgeting and value hunting from consumers around the world. In fact, 52 percent of global respondents agree that they are on a tight budget when shopping for household products.

Bryan adds: “The beer industry has proven itself adept at identifying emerging trends and adapting products to meet these in unexpected and innovative ways. It is likely that the coming years will be shaped by a renewed sense of value consciousness, products garnered towards nostalgia and simplicity, and an emerging digitally led lifestyle. Larger players such as Heineken have the capital backing to ride out this storm and capitalize on the new trends and product opportunities that will inevitably arise from it.”

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