Europe Beer Market Size
In 2015, the beer market in Europe was valued at 121.82 billion USD (ca. 111.25 billion EUR). Until 2019, it grew at a compound annual growth rate (CAGR) of 1.92% to reach 131.45 billion USD (ca. 120.05 billion EUR).
The United Kingdom accounted for the largest share of the market value with 19.4% of the total in 2019. It was followed by Germany and Spain, accounting for 16.7% and 12.3%, respectively. The ten largest markets in Europe accounted for 77% of the total value.
In terms of value growth, the majority of markets recorded positive dynamics with less than 5% CAGR. However, six markets recorded negative dynamics – Switzerland, Slovakia, Poland, Finland, Serbia, and Estonia. Only three markets recorded growth above 5% CAGR - Turkey, Montenegro, and Iceland.
Europe Beer Market Trends
Premiumization has significantly impacted the beer market in Europe. As a result, beer companies have focused more on quality instead of quantity as more consumers express desires for better beer.
Consumers desires to cut down on alcohol intake can also be linked with premiumization, meaning they can afford to purchase beverages of higher quality. Thus, although consumers drink less, they opt more often for premium beer.
Different generations have very different expectations when it comes to beer. Younger consumers are more prone to try new brands. Accordingly, people under 54 are more likely to opt for a premium beer, which also explains to some extent the popularity of craft breweries.
To respond to the increasing demand for craft beer, microbreweries in developed markets have been especially active in developing new products.
Craft beer innovation has been mainly led by companies from Europe. While in 2013, North America was responsible for about 52% of all craft beer launches, in 2017, the trend shifted and Europe accounted for 54% of launches.
Although countries like the Czech Republic and Germany have strong brewing traditions, they are still dominated by their own beer styles. However, the growing consumer interest in craft beers is stimulating more breweries to experiment. In attempt to fuel growth, some craft breweries have shifted their focus on beer substitutes such as hard seltzer, canned cocktails, hard kombucha, and others.
At the same time, other players increased their attention on local markets and tap room sales. In line with the craft beer movement, the overall market has witnessed an increased proliferation of smaller and independent breweries, selling locally and directly to consumers.
Low and Zero Alcohol Beer
The surge in popularity of non-alcoholic beer in Europe is due to several reasons:
- the ongoing health and wellness trend;
- better tasting low and zero alcohol beer;
- an increase in variety of alcohol-free beers, including non-alcoholic craft beer.
For several years now, European beer companies have faced a new breed of health-conscious consumers who prefer to buy non-alcoholic beers rather than alcoholic ones. As a result, the majority of companies have responded by developing a wide range of low- and no-alcohol offerings.
Zero-alcohol beer also contains less calories, which serves to further entice health-conscious consumers. Furthermore, more people become conscious of what they consume and thoroughly examine product labels. By the end of May 2019, 85% of beers produced in the EU labelled their ingredients, while 60% of pre-packed beers labelled calorie information similarly to other food and drink products.
In 2019, the Brewers of Europe and its members have signed a Memorandum of Understanding, committing to label ingredients and energy values on all beer bottles and cans in the EU by 2022. As of 2021, 93% of beer volume sold labeled ingredients, and 86% – labeled energy use.
Craft breweries also produce non- and low-alcohol beers and in Germany alone, breweries produce roughly 500 alcohol-free beer varieties. Although alcohol-free beer is much more developed in Western Europe, the Eastern European market has also witnessed steady growth in recent years.
However, the arguably biggest reason alcohol-free beer has recently become so popular is rather simple – it simply tastes better than before.
Europe Beer Market Challenges
The beer market in Europe faces two major challenges:
- COVID-19 pandemic.
- Shortage of raw materials for can manufacturing;
- Rising energy costs;
Due to covid, on-premise sales at bars, restaurants, and breweries fell to nearly zero. Micro-breweries have been most at risk, due to their extreme dependence on direct sales to bars and restaurants.
In the Czech Republic, numerous breweries were forced to throw out liters of beer because they were unable to sell it. Meanwhile, the beer market in Bulgaria experienced a 20% decline in sales due to lockdown measures.
The effect of the pandemic varied across companies. For Heineken, beer sales declined by about 14.5% in Africa Middle East & Eastern Europe, while Carlsberg’s Eastern European division experienced very little impact in the first quarter with revenue growth of 5.5%.
Especially in Russia, Carlsberg saw strong growth. For most people, however, beer became a luxury, resulting in less beer purchases in favor of essential goods. Overall, the effect of COVID-19 on the beer market has been less impactful than other food and drink categories. According to industry experts, the segment usually performs slightly worse during recession than during economic expansion, but there are no dramatic differences.
Shortage of Raw Materials for Cans
A supply shortage of magnesium has resulted in record prices and distortions of global supply chains. In September 2021 magnesium prices went past 10,000 USD per ton, up from approximately 3,000 USD per ton in May 2021. As of May 2022, the price per ton is north of 5,000 USD.
These developments make it exceptionally difficult for European companies to acquire magnesium at viable volume. Thus, European Aluminium and several other industry associations have urged the EU Commission and governments to swiftly address the issue with Chinese authorities to mitigate the potential negative effects of a magnesium shortage.
The central government in China has urged provincial governments to meet annual green initiative targets, with the goal to reach carbon neutrality by 2060. Thus, Chinese production of magnesium has been reduced to such an extent that deliveries to Europe have dropped drastically since September 2021.
China’s magnesium exports to Europe account for 45% of the country’s total production but these exports supply 95% of the region’s magnesium needs. The vast majority is being used by the aluminium industry in Europe, followed by the automotive and steel industries.
Rising Energy Costs
The steep increase in energy costs in Europe have severely affected every European industry. In the aluminum industry, smelting is an energy-intensive process, which, on average, accounts for 30% of total production costs, while for brewers – generally less than 10% of total costs.
If aluminum smelters begin to close down due to high power costs, the European aluminum industry will suffer a heavy blow. That will have disruptive effects on downstream industries, including beer producers.