Brau Beviale 2010: Dialogue in Nürnberg
The European beverage industry meets in Nürnberg from 10–12 November at Brau Beviale 2010, its most important exhibition of the year. The event attracts some 1,400 exhibitors of beverage raw materials, technology, logistics and marketing ideas, and 34,000 visitors with money to invest.
When asked about their reasons for visiting, half the “Brau Beviale community” said they used their exhibition in 2008 to source information about new products. Reasons such as exchanging views, maintaining contacts, training, market orientation and preparation for investment decisions were just as important. And for all the hustle and bustle of business, the industry cultivates a rather seldom ritual in Nürnberg: they take time for each other and for a good discussion with partners, colleagues, friends or competitors to keep contacts active and exchange views.
The challenges of the new decade also offer enough to talk about during the exhibition. Seldom has more happened than in the past decade, which started with one worldwide economic crisis – the bursting of the dot.com bubble – and ended with another. For the Europeans, however, the millennium change was only a turning point in the calendar. It was the end of a period, not the turn of an era, because from a strict historical viewpoint, the developments in Europe since the fall of the Iron Curtain and the end of the Cold War until today represent a continuum.
The European integration process of the past two decades has created the world’s biggest single market. Despite much criticism, what has been achieved so far is impressive: The European Union with its 27 Member States has one of the strongest currencies with the euro. It is a key player in international crisis management and offers its 500 million citizens a high degree of legal and social security. We should also not forget that today’s 20-year-olds are the first generation of young Europeans to have grown up not only with the major EU enlargements, but also with the four freedoms of the Single Market: the free movement of persons, freight, services and capital.
First silver lining on the horizon after the turning point in 2009
If there is a turning point in recent European history, then 2009. The deep and painful worldwide financial and economic crisis also put an end to the European boom, which had given the economies in Central and Eastern Europe in particular large growth figures over two decades. Hardly anyone knows this better than the brewers and beverage producers. Beer and beverage consumption in Europe increased for almost twenty years. But those who took a closer look recognized that the overall positive development was due to an unparalleled race to catch up by consumers in Central and Eastern Europe. Whereas the trend for beverage sales was frequently downwards in many markets of Western Europe, there appeared to be no limits to the demand for non-alcoholic drinks and beer in the markets of Central and Eastern Europe. The supply industries, which present their products at Brau Beviale, also profited from this. The investments of the globally operating brewing and beverage concerns had filled their order books for years on end. However, the opposing developments in European beverage consumption were stopped dead in their tracks in 2009, when all markets suddenly came under pressure. The signs indicated recession and the slump started. As private consumption, especially the Europeans’ spending on beverages, cannot be considered separately from the overall economic development, a lot depends on how the economies recover this year and in the following years and how quickly they achieve their growth and employment potentials again.
The World Bank warns in its report on Global Economic Prospects 2010 that although the worst phase of the financial crisis is possibly over, the recovery of the world economy is weak. The worldwide Gross Domestic Product (GDP), which dropped by 2.2 % in 2009, is to rise by 2.7 % this year and 3.2 % in 2011. Although this is the most probable scenario, the outlook is still clouded by considerable uncertainties. Depending on how the consumption and business climates develop in the coming quarters and on the timetable for phasing out the fiscal and monetary incentive programmes, growth in 2011 could be only 2.5 % or possibly up to 3.4 %.
A relatively robust recovery is expected for the developing countries: 5.2 % this year and 5.8 % next year, after 1.2 % in 2009. The GDP in wealthy countries, which dropped by 3.3 % in 2009, is to rise less strongly, namely by 1.8 % in 2010 and 2.3 % in 2011.
The EU Commission’s forecast for GDP is, however, less optimistic than that of the World Bank. The Commission expects economic performance in the 27 countries of the European Union to fall 2 % this year.
Beverage consumption: slight growth rates forecast
If the British market researchers at Canadean are right, the gap between Western Europe and Central and Eastern Europe will open up again this year. They assume that the recession in Western Europe will be much more marked than in many countries of Central and Eastern Europe, where it will only lead to a temporary drop in sales. Beverage sales in Central and Eastern Europe are to increase again this year and appreciably pick up speed in 2011. For beer sales in these markets, Canadean forecasts rises of 0.1 % for 2010 and 1.6 % for 2011 compared with 2010. The upward trend is to be more appreciable for non-alcoholic drinks, which could increase by 1.1 % in 2010 and by 2 % in 2011. However, these forecasts assume that the economic situation in these markets will distinctly improve in 2010 and that the slump in beverage consumption due to the long winter can be compensated for by a warm summer.
If Europe is considered as a geographical unit including Russia
(142 million inhabitants) and the Ukraine (46 million), the following sales volume ranking results: Russia, Germany, Great Britain, Poland, Spain, Ukraine, the Netherlands, the Czech Republic, Romania and Belgium. Although no one would like to forecast the depth of the Russian recession this year, the per head consumption of non-alcoholic drinks in Russia after the drop to 434 litres in 2009 could still be 438 this year and 446 litres in 2011. On the other hand, beer consumption in 2010/11 will probably stagnate at the 2009 level of 79 litres/head. The consumption of non-alcoholic drinks in the Ukraine fell only slightly in 2009 to 399 litres/head. It is expected to rise to 404 litres/head in 2010 and 419 in 2011. Beer consumption, which dropped only negligibly to 62 litres/head in 2009, could recover in 2010 and rise to
65 litres/head again.
The biggest hopes within the EU are Poland and Romania, alone because of the size of these markets. Per head consumption of non-alcoholic drinks in Poland is expected to rise from 213 litres in 2009 to 223 this year and 232 next year. The growth for beer is slower: from 90 litres in 2009 to 92.7 litres in 2011. The estimates for Romania are similarly positive, where the per head consumption of non-alcoholic drinks is expected to rise from 228 litres in 2009 to 238 this year and 249 in the coming year. After dropping to 91 litres/head in 2009, beer consumption should increase to 94 this year and 96 in 2011 (Canadean).
High pressure of costs – sparing use of resources
Many companies in the supply industries see the first signs of hope. After an upturn in business at the end of 2009, the firms are increasingly optimistic for the year in progress. There are recovery tendencies in some European countries, but the situation remains difficult in other important markets, such as in Eastern Europe.
The beverage concerns listed on the stock exchange, which call the tune in these markets, will also be forced to cut costs in the future to achieve the quarterly profit improvements the financial markets and shareholders expect from them – recession or no recession. So the European market will also create great challenges for all players in the coming years. Only those who manage to defy the adverse developments in Europe, namely the advance of discounters, increased pressure on prices, restrained consumption, and reduced demand but with the same large choice of brands and packages expected by consumers, can hope to avoid being punished by shareholders. One thing is sure: The brewers and beverage producers in Europe will have to increasingly cut their costs. This means more concentration, i.e. works closures and rationalization.
Savings in energy and water consumption can be marketed particularly effectively, as they also help to protect the environment, which plays a key role in the companies’ sustainability reports. The water consumption of a beverage concern is not yet associated with high costs, but the total amount for a concern like SABMiller with a worldwide consumption of more than 94.5 billion litres a year does have an impact on costs. This means more than 4.5 litres of water are required for a litre of beer. Water and energy combined account for five per cent of the company’s costs, according to SABMiller. The costs of raw materials, packaging and labour are far higher.
The major issues at Brau Beviale have now been mentioned. Innovative ideas on how industrial energy and water management can be optimized are also provided by the “Energy & Water” theme pavilion at the heart of the exhibition, which is organized by NürnbergMesse in cooperation with the Competence Pool Weihenstephan (CPW) of Munich Technical University.
Packaging is also becoming more controversial. The ecological aspects of packaging like consumption of resources, emissions or waste are the subject of discussions between beverage producers and component suppliers. Competitive pressure and legislative measures have contributed to relevant success, also the brewing and beverage industry’s own efforts. Innovations are aimed at reducing and avoiding packaging, sparing resources and improving recyclability. Now it is a question of finding new and optimized solutions to meet the many demands under the changed conditions.
More info:
www.brau-beviale.de