Published on : Jan 20, 2016
The global beer market has started to rise again with the U.S poised to stay as s key importer. On the other hand, China is the top most consumer of beer globally. Additionally, the activities of mergers and acquisitions have immensely raised the major brands’ expansion, thus propelling industry revenue. The conditions within the beer market are predicted to decline all through 2020. Below is the elaboration on the key trends prevalent in the global beer market.
- Great Product Quantity, but Too Little Volume: Breweries have been battling a number of volume issues in the market. There is a great competition seen in the premium and super- premium segments, thus witnessing robust development and have been able to retain great profit margins. Owing to economies of scale being less significant inside these lucrative sectors results in successful competition by the niche providers.
- Challenges of Distribution: A number of supermarkets and big convenience stores have become the topmost distribution channels for the manufacturers of beer and this is at the expense of specialty stores and bars and thus pose a number of challenges. Further pressure is posed on the margins and prices of manufacturers owing to the fact that retail stores provide low-profit margins even in the times when they aren’t providing discounts. Retailers have also posed bigger demands on a number of manufacturers and have forced more frequent and smaller delivery of products for reducing the costs of warehouses.
- Organizational and Operational Changes: After witnessing years of continuous growth in volume, brewers aren’t ready for any new challenges. Product teams, for example, utilized for portfolio stabilization could face difficult times in keeping up with the steady and robust product introductions of a number of active manufacturers. In addition, brewers also witness organizational difficulties. For overcoming structural deficits, a number of breweries have been following the steps taken by successful FMCGs such as L’oreal, Unilever, Colgate-Palmolive, and Reckitt Benckiser. They are looking for cost saving in marketing and manufacturing by the adoption of both global and region organizational models.
Thus, the market faces a number of challenges, however, the company’s total expenditure is on the rise since past five years owing to rising automation and consolidation amongst the market’s topmost manufacturers of beer.