EU beer market sales fell 20% so far this year due to COVID-19

Successive lockdowns with increased unpredictability will be logistically disastrous for brewers, as beer is best consumed fresh. Once a barrel is opened it needs to be finished within days; bottles can't just be kept in storage for months. [Shutterstock/Deliris]

The EU beer market estimates that its sales have dropped by 20% so far this year, a figure which could rise to 25% by the end of the year, the secretary-general of the Brewers of Europe, told EURACTIV in an interview.

“Our estimate is that on average, we have lost until now about 20% of our beer sales,” Pierre-Olivier Bergeron said, referring to the first six months of the pandemic.

The estimations are based on the combination of on- and off-trade sales, meaning sales in pubs and restaurants and retail sales, respectively.

Previous estimations suggested a 30% drop in beer sales, but the loss was partly mitigated thanks to some adjustments via retail sales. However, this will in no way compensate the overall damage.

EU brewers and the hospitality sector have been hit hard by a series of lockdowns imposed across Europe to slow down the resurgence of COVID-19 cases.

According to the European Commission, 15 member states have closed their bars and the rest have imposed severe limitations, which in some cases equate closure.

The picture of the beer market is not uniform across Europe, considering that the on-off trade ratio varies in the 27 EU member states, ranging from 7% on trade in Estonia to 70% in Portugal.

In Belgium, Europe’s ‘kingdom of beers’, on-trade beer sales fell of 55% in May, June and July. During this period, off-trade beer sales were also down compared to 2019 notably due to the restrictions on home and private gatherings.

“Even when bars re-opened over the summer, social distancing measures and relatively low consumer confidence, resulted in on-trade beer sales remaining at only half of 2019 levels,” Bergeron said.

In Germany, he said, on-trade sales were practically decimated in spring, while the summer re-opening did not lead to a full recovery as bars generally operated at 50% capacity.

Another example is Ireland, where many pubs never reopened between the first and the second wave, while restrictions remained in place for pubs that did not serve food.

“We calculated an 8.5% decline in the overall beer market in the first quarter, followed by a 17% decline in the second quarter. It was interesting to see that there was a significant increase in retail sales, but that did not compensate for the drop off in on-trade,” Bergeron emphasised.

An extreme example is Italy, the epicentre of the first wave, which opted for a total lockdown earlier than any other country.

Bergeron said the second quarter was disastrous, with beer sales seeing a 50% reduction. A completely different picture was reported in the third quarter, as Italy opened to some extent its borders to tourists.

“But looking at the third quarter, we did see pretty significant increases in retail sales. In both on and off-trade, the country actually reached almost the 2019 level,” Bergeron said.

The case gets more complicated as globally operating companies with robust channels towards the off-trade could somehow compensate the on-trade losses; However, this is not the case for small and medium-sized brewers, who are forced to switch their business models entirely.

As early as the first lockdown, the hospitality sector called on EU governments to mitigate the economic impact of the pandemic focusing on specific measures such as lowering VAT rates on alcohol.

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Bergeron admitted that a number of measures have been taken at the member state level, such as introducing – at least temporarily – lower rates for beer or lower rates for beer on tap. Other measures included excise duty relief for unconsumed beers or general support measures like grants and loans.

“I cannot complain too much. I would potentially complain in a few months if we see member states withdrawing or not prolonging the measures. This is absolutely fundamental. We have to have prolongations,” he said referring to the second lockdowns many member states have imposed.

The fear of successive lockdowns

Many policymakers suggest that until a large part of the population has been vaccinated, pubs and restaurant will remain closed or some restrictive measures will continue.

However, an “on-off” approach with successive lockdowns with increased unpredictability will be logistically disastrous for brewers, as beer is best consumed fresh. Once a barrel is opened it needs to be finished within days; bottles cannot be kept in storage for months.

Bergeron said bars and cafes have taken all necessary safety measures and called on policymakers to reconsider their decisions to shut them down.

He noted that in the vast majority of cases, we are talking about small establishments with fairly low contamination possibility, according to figures.

“I’m not referring to the hospitality sector at large because we’ll find examples of venues and establishments that actually did not manage to implement safety measures, because they were too big […] Small establishments have this enormous potential of providing a safe environment,” he explained.

Asked if the economic crisis may delay the sector’s “sustainability turn” in line with the EU Green Deal’s goals, he replied: “not considerably”.

“It’s a window of hope from that particular perspective. But at the same time, as I mentioned earlier, for the time being, we’re going through tough times.”

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[Edited by Zoran Radosavljevic]

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