The beer market is highly concentrated with the top five brewers producing about 50% of global volumes and controlling 65% of industry profits. Volume growth has slowed and has been broadly flat in recent years due to both macro and more structural issues. A recovery in emerging markets where per capita consumption of beer is still relatively low should see the category back to growth, but more structural volume headwinds particularly in developed markets persist. In many developed markets demographics are less favourable, per capita consumption is mature and younger generations of consumers are drinking less alcohol than their parents and grandparents. However, it is not all doom and gloom in developed markets. While volume growth has stagnated, consumers aspire to “drink better” trading up to more expensive craft beers, low/no alcohol beers and flavoured malt beverages. Emerging markets have also seen increasing demand for premium products, and the roll out of higher-priced global brands has accelerated. Premiumisation in both developed and emerging markets has driven category value higher even as volume has remained stable.
Paul Flood – multi-asset manager, Newton Investment Management