Market for beer has gone flat

Aug 27 2009 by Peter Jackson The Journal

UK pub-owner Punch Taverns has blamed bad weather during most of the summer for disappointing profits.

It said that while trade in late June and early July benefited from good weather, the remainder of the summer has been unhelpful.

Personally, I would have said we have enjoyed – if that’s the right word – a fairly typical British summer but I mustn’t rain on Punch Taverns’ parade. I accept that long-term trends are not encouraging for pubs or brewers.

True beer sales have been growing worldwide but the main growth in demand has been coming from developing countries, foremost among which was – you’ve guessed it – China, which has overtaken the US to become the largest beer market in the world. Other growth areas are Asia-Pacific generally and Russia.

In the developed markets, however, such as Western Europe, North America and Australasia volume sales have declined, or, at best remained static.

According to the British Beer and Pub Association, pubs are closing at a rate of 52 every week, which is scary, even if there are still 53,000 of them across the UK, so we shouldn’t run out for about 20 years.

The reasons are obvious. Not only are the markets saturated – no pun intended – but also so many factors are conspiring against beer. These range from stricter drink-driving legislation to greater health consciousness and being driven out into the street if you want to smoke. There is also growing competition from other drinks such as wine, alcopops and even bottled water.

The current economic difficulties hardly help either. Punch, the UK’s largest pub chain, said that consumers are still spending less because of the recession.

But probably most important are social changes. Mass beer consumption went hand in hand with the societies of the industrial revolution which relied on heavy industries. This is no longer the kind of world we live in in the developed West where you will no longer meet a miner or steelworker who downs six to eight pints every night – either in County Durham or Pittsburgh.

And while the brewers can make gains in the developing countries where there are still plenty of thirsty miners and steelworkers, once those workers become software engineers, so those markets will also decline.

Peter Jackson is a writer and former business editor of The Journal – p.jackson77@btinternet.com