Beer & hospitalityBEER IS VITAL TO THE EUROPEAN ECONOMY AND IS CLOSELY INTERLINKED WITH THE SUCCESS OF THE HOSPITALITY SECTOR
The beer sector is embedded in communities. It sources locally, creating up to 2.3 million jobs in villages, towns and cities across the whole of Europe.
As much as 94% of beer-related employment occurs outside the brewing companies themselves. This means that 1 job in the brewery creates an additional 16 jobs in the economy.
That economic activity provides significant tax revenues, in particular through hospitality beer sales, and value to local and national governments.
Since March 2020, Europeans have had to adhere to measures that aim to prevent social situations. Hospitality venues, where one third of all beers are typically served, have been shut down or heavily restricted, whilst most gatherings of friends and family, events and festivals, were banned or had to be cancelled.
Total annual consumer spending on beer in the EU was previously over €117 billion. Without the beer enjoyed in hospitality, the 1.7 million bar and restaurant jobs created by beer and the €24 billion worth of value to the EU economy have been impacted.
One third of all beers are served and enjoyed in hospitality
There are 1.7 million bar and restaurant jobs created by beer in europe
Beer served in Hospitality generates €24 billion in value to the EU economy
1 job in the brewery creates an additional 16 jobs in the economy
We are proud that for a decade since the last economic shock, we could speak in the beer sector of stabilisation and recovery, followed by steady and sustained progress, further strengthening beer’s contribution to the European economy as a major consumer good and export commodity.
Prior to the COVID19 crisis, the beer sector was growing, with production and consumption increasing, exports rising, brewery numbers on the up and the range of beers continuing to expand.
However, it is estimated that the European beer volumes in the first half of 2020 may on average have declined by as much as 20%, with the main shock felt across the hospitality sector, closed in many countries for around three months, during the period of the year when the beer market starts to build.
The size of the impact has depended on the spread of the virus, the extent of the restrictions imposed by government, the generosity of the support measures put in place and, perhaps most importantly, the size of the on-trade beer market, which varies, depending on the country, from 7 to 70 percent of the beer market by volume. It is therefore also interesting to look at some specific countries:
In Belgium, on-trade beer sales were down by over 55% in May, June and July. Unsurprising when there was almost a full closure during these months. However, off-trade beer sales were also down in these months when compared to 2019, reflecting the restrictions too on at-home and other private gatherings. Even when bars reopened over the summer, tight social distancing measures and low consumer confidence meant that on-trade beer sales remained at only half of 2019 levels.
In Ireland, where many pubs never reopened between the first and the second COVID wave as restrictions remained in place on pubs that didn’t serve food, an 8.5% decline in the overall beer market in Q1 was followed by a 17% decline in Q2, where significant increases in retail beer sales still didn’t compensate for the drop-off in horeca beer sales.
Italy is a very interesting country to study. Having felt the full force of the virus first, going into complete lockdown earlier than other countries too, Q2 was of a disaster with on-trade beer sales down more than 50%. But Q3 saw a major recovery, as it was one of the few countries open to foreign tourists as the economy also reopened, with the on-trade beer market almost returning to 2019 level.
Poland is another interesting market, where the on-trade is typically only 14% of the market. The overall beer market, in volume terms, was therefore only down 3 to 6% in Q2 and Q3, still significant declines nonetheless.
In Portugal, the biggest on-trade beer market by percentage, beer production was down 20% in the first half of this year, reflecting a large on-trade beer market that was down 34% and only compensated for by a 16% increase in the, already much smaller, off-trade beer market.
Finally the UK, where pubs were closed almost throughout Q2. Upon reopening over the summer, on-trade beer sales were still down by 30% in July and August.
The latest statistics on the impact to the beer sector are due soon, and will begin to tell the full story of 2020. However, a challenging summer, followed by a second wave of lockdowns and what looks to be a challenging winter, means that some predictions of an overall decline of up to 20% across the beer market in the whole of 2020 may not be too wide of the mark.
If the right support measures are in place, it is hoped that the diversity of choice, number of breweries, and interest in beer will remain high as we recover from the pandemic. However, many businesses will have been badly affected, some will have closed forever and solidarity will once again be key to ensure renewed growth that ultimately drives a green recovery for the whole economy.
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