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Alcohol category growth%
Beer growth trends by volume%
Beer share of alcohol trends in major
emerging markets
Forecast five-year compound annual
growth rate (CAGR) by region – 2011 to
2015
% Alcohol category growth
Wine
Spirits
Beer
Growth driven by emerging markets
The global beer market1
In the past decade, the global beer market has gone through a process of rapid change. In
many emerging and developing markets, economic and societal developments and
transformative improvements in the quality and appeal of beer brands have resulted in
strong organic growth in the beer category. Developed markets have also undergone
change as brewers have responded to constrained or declining beer consumption trends.
Industry consolidation has continued apace, and today the four largest brewers –
Anheuser-Busch InBev, SABMiller, Heineken and Carlsberg – produce almost half of all
industry volume and generate up to 70% of industry profits2. Beer industry consolidation
has continued during the last 12 months, with smaller transactions in Asia, Africa and
Latin America.
Alcohol trends
Beer consumption continues to rise in Africa, Latin America and Asia, driven by growth
in population and incomes and improvements in beer quality and appearance. In this
context, many consumers are shifting from informal and unregulated forms of alcohol to
aspirational, attractively-branded and safer commercial beers. The beer category is
therefore growing at the expense of subsistence alcohol.
Commercially produced beer has also been claiming a greater share of the regulated
commercial alcohol market in emerging countries. On a pure alcohol basis, its share rose
from 34% in 2000 to 40% in 2010.
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Beer category trends
Despite economic pressures, total global beer consumption recovered slightly in 2010,
growing at over 2% after a downturn in 2009, caused by the global economic recession.
Over the past five years, the global beer category has maintained an average compound
annual growth rate (CAGR) of 3.3%. In 2010, emerging markets grew at an average
CAGR of 5.7% – the main growth coming from China, Africa and South America –
while developed markets declined by 1.7%.
Within the emerging markets, China recorded volume growth of 6% and, despite
inflationary pressures, an increase in volumes of premium lager. Africa saw healthy
growth of 8% with increased volume in both the premium and more affordable price
segments, driven by Angola, Nigeria, Tanzania, Ghana, Uganda and the DR Congo. Latin
American beer volumes grew by 3% in 2010, with reductions due to a material tax
increase in Colombia, more than offset by rapid growth in countries such as Peru. In
Eastern Europe, beer volumes declined by almost 5% in the face of continuing
unemployment and depressed consumer confidence affecting beer sales in bars and
restaurants.
Beer consumption in developed markets continues to suffer from high unemployment,
high fuel prices and constrained consumer spending. In the USA, where unemployment is
particularly severe among key beer drinkers, beer volumes have fallen slightly although
accompanied by consumer uptrading between industry price segments. Beer volumes
continue to decrease in Western Europe as consumers switch to other beverages and
reduce on-premise consumption.
Outlook
In the 2011 calendar year, global beer market volume growth is forecast to be 2.5%, led
by continuing strong performances in Asia, Africa and Latin America. China and Africa
are expected to grow by almost 5% and Latin America by almost 3%.
Looking ahead to 2015, it is likely that growth will continue to be led by emerging
markets. The 25 fastest-growing markets are forecast to deliver over 5% CAGR in beer
volumes. China is expected to account for almost 40% of this growth with Vietnam,
Brazil, Ukraine, Nigeria, India and Peru contributing significantly.
SKOL BACKGROUND. SKOL = “TOAST” in Scandinavian. Ind Coope &
Allsopp took full control of Arrol’s in 1951, which included 29 licensed
houses, and Alloa Brewery began to produce only lager. The company
continued to brew lager for Calder’s and Graham’s, with Graham"s Golden
Lager (a brew that began its life in Allsopp’s in Burton) rechristened the
now-famous Skol in 1959.
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AB InBev Sales Growth Misses Estimates as U.S., Brazil Drop
Thursday, August 11, 2011
Aug. 11 (Bloomberg) -- Anheuser-Busch InBev NV, the world's largest brewer,
reported growth in second-quarter sales that missed analysts' estimates as it sold less
beer in countries including Brazil and the U.S., its biggest markets.
Revenue, excluding the effect of acquisitions, disposals and currency shifts, rose 3.7
percent, the Leuven, Belgium-based company said today, less than the 4.9 percent
median estimate of seven analysts surveyed by Bloomberg News. The amount of beer
sold rose 0.3 percent, weighed down by declines of 1.4 percent in North America and
2.6 percent in Brazil.
AB InBev's market share in the U.S. declined by about 0.5 percentage point in the
quarter after the company raised prices of some of its cheaper beers in a shift toward
more-expensive products. The brewer, which got more than three-quarters of
revenue from the Americas last year, said it's also being affected by low growth in
disposable incomes in Brazil. Profit growth for the quarter met analyst estimates,
helped by savings from the 2008 transaction that led to the company's creation.
"The trends are developing as we foresaw, although in the second quarter a bit
weaker than we expected," Gerard Rijk, an analyst at ING in Amsterdam, wrote in a
note today.
AB InBev rose 11 cents, or 0.3 percent, to 35.26 euros at 9:04 a.m. in Brussels
trading, trailing gains in European stock markets. Belgium's benchmark Bel20 Index
was up 2.1 percent.
U.S. Weather
So-called normalized earnings before interest, taxation, depreciation and
amortization rose to $3.75 billion from $3.35 billion a year earlier, the brewer said in
a statement. The median estimate was $3.76 billion.
The amount of beer sold in the U.S. in the quarter was affected by poor weather in
the quarter, AB InBev said.
The brewer said it's committed to a strategy of selling a higher proportion of moreexpensive beers in the U.S. It aims to narrow the gap in prices there between
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premium and sub-premium brands to 15 percent from 25 percent in the next few
years, Chief Financial Officer Felipe Dutra said in May. AB InBev has increased its
share of high-end beer sales by 1 percentage point since December.
"In the U.S. we're all monitoring what's going on with the economy and politics, but
we'll focus on what we can control," Dutra said today on a conference call.
Budweiser Share
Market share declines for the Budweiser brand continue to decelerate, the company
said. The beer had the best half-year volume performance in the U.S. for 11 years,
helped by promotions that included a national happy hour, or "Flag day," on June 14.
AB InBev has also introduced new packaging for its cans, featuring a red "bowtie"
design.
AB InBev, is raising prices in the U.S. and Brazil to increase profitability. The decline
in volume in Brazil was accentuated by the strength of the prior-year performance,
when drinkers bought beer more at the time of the soccer World Cup.
The company said that it increased its share of the market in Brazil to 69.3 percent in
June, and that market share reached an average level in the first-half of 68.6 percent.
"Share gains should drive better volume," Dutra said. "We have a high degree of
confidence in Brazil."
Cost savings related to the 2008 acquisition of St. Louis- based Anheuser-Busch Cos.
were $70 million in the quarter, the company said. AB InBev has a three-year goal
for $2.25 billion of total savings from the $52.5 billion takeover by the end of 2011
and said today it's on track to deliver "at least" $270 million of so-called synergies
this year.
The 2011 outlook is "essentially unchanged," the company said. It expects the tax rate
to be less than 25 percent this year compared with 25 percent to 27 percent "in the
long run."
Net income rose to $1.45 billion from $1.15 billion a year earlier. Total revenue
gained 8.5 percent to about $10 billion.
--Editors: Paul Jarvis, Celeste Perri.
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Brazil to Lift Ban on Beer Sales at 2014
World Cup, Veja Says
Brazil’s government plans to lift a ban on sales of alcoholic beverages at soccer games
during the 2014 FIFA World Cup, after receiving a request from the sport’s
governing body, Veja magazine reported, without saying where it got the
information. Anheuser-Busch InBev NV (BUD), one of the event’s sponsors, would
have exclusive beer sales rights if the ban is lifted, Veja said.
AB InBev ups price to cover slowing sales
Friday 12th August 2011, 1:15am
ANHEUSER-BUSCH InBev, the world’s largest brewer, lifted core profit in the second
quarter as price rises compensated for weak beer sales in its main markets of the US and
Brazil.
The group, which makes Stella Artois, Beck’s and Budweiser, said beer volumes in the
UK had fallen by 17 per cent after it came up against tough comparative figures a year
ago when sales were boosted by the World Cup.
The group’s revenues rose 3.7 per cent to $10bn (£6.1bn) in the quarter, while underlying
profits rose six per cent to $3.7bn, boosted by a strong performance in China.
Profits were also helped by lower tax and financing costs and the weakness of the US
dollar, since AB InBev generates much of its sales in currencies other than the dollar. In
Brazil beer volumes fell 2.6 per cent due to low growth of disposable income.
Aug 9, 2011 14:44 PM
Brazilian beer market is forecast to increase
By: Jennifer Fottrell
Premium beer, which currently accounts for 5% of sales in the Brazilian
beer market, is expected to increase its share by 3% to 8% in 2012.
There is significant room for further growth of sales of premium beers in Brazil, according to
new forecasts. Roberto Nascimento, professor at ESPM University's Group for Retail Studies,
estimates that the premium beer segment in Brazil could reach a 10% share by 2013.
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The dynamics for continued volume and pricing growth in Brazil's beer industry are attractive.
Per capita consumption in Brazil is 57.7 liters, which is lower than many mature markets such
as Canada (69.3 liters) and the United States (80.7 liters). (bmg)
http://www.thekevinclancy.com/casestudies/cs_skol.html
From #4 in Brazil to Owning Budweiser in Record Time
Background

Brazil is the third largest beer market in the world with more than 100 brands
competing for share.

Most of these brands are undifferentiated. As in the U.S., the category was taking on
the characteristic of a commodity market, where brand name means little and
purchase decisions are based largely on price.

With a 15% share of the Brazilian beer market, Skol was the #4 player in the market,
trailing far behind power beer brands Brahma and Antarctica, which together
commanded more than 60% of the total category.
Diagnosis

The Skol brand lacked a clear and differentiating market target and positioning. The
brand was lifeless and boring.

While Brahma and Antarctica enjoyed 90% distribution through on- and off-premise
channels, Skol only had 50%, mostly through supermarkets and grocery stores.

Skol’s distribution was particularly weak in the primary channel for beer sales—onpremise (a.k.a., bars).
Strategic Research

Skol undertook a large scale study among 1,300 beer drinkers in 26 large and small
populated cities.

The study assessed the needs, problems, and motivations of beer drinkers, as well as
their perceptions of different brands. Copernicus identified the most profitable people
and occasion segments, the most compelling positioning, and an effective and efficient
media strategy using the Copernican Media Optimizer model.
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
This was followed by a series of copy tests to select a 3-sigma advertising campaign to
communicate the positioning and stimulate buying behavior.
Strategic Options

Skol could be phased out of the market, freeing up marketing dollars for other brands.

Skol could continue to focus distribution on the supermarket and simply maintain
current market share.

Skol could make a play for market share by dropping prices.

Skol could be repositioned as a lighter, smoother beer supported by a marketing
budget worthy of a market leader.
Strategic Choice

Skol wanted more than to be an “also ran” brand so it decided to build a strategy
based on the dimension key targets indicated was most motivating and on which Skol
could deliver: smooth flavor.

“It goes down smooth” became the central message of the advertising and marketing
communications campaign.

Communications expenditures were significantly increased to reflect brand building
objectives.
Strategic Implementation

Copernicus developed a marketing mix model for the Brazilian beer market, enabling
Skol to test what inputs in the marketing plan (including strategic elements such as
targeting and positioning and tactical elements such as primetime GRPs) would yield
desired outputs (i.e., market share and brand equity).

Importantly, the marketing mix model fostered a better understanding among the
sales force of key distribution channels, and helped set specific and realistic
distribution targets for the next 24 months.

The sales force redirected efforts to include broader distribution to get the product to
the target beer drinkers, with a heavy emphasis on on-premise sales.
Performance Results

In just four years, Skol skyrocketed from the #4 position to the #1 position in its
home market. Its market share doubled to 31%.

Skol’s distribution reached 93%, surpassing Brahma and Antarctica the leading beers
in South America.

Beer drinkers ranked Skol as superior over the other brands on all key measures of
taste and flavor.
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
By 2006, after the “smooth” strategy had been launched internationally, the brand
achieved unprecedented sales. It had become the #3 beer
brand in the world without a single drop sold in North America.

Carlos Brito,the original brand manager of Skol in Sao Paulo, became CEO of InBev,
the world’s largest brewer, and the owner of the Skol brand. In July 2008, Carlos
successfully acquired Anheuser Busch.
Best Selling Beers in Brazil
Brazil is not a country normally associated with beer. Still, Brazil has the fifth highest
population in the world with more than 200 million people. The local brand of Brazil, Skol,
controls about one-third of the market in top selling beers. Brahma and Antartica, two other
brands produced in Brazil have market shares of about 20% and 14% respectively. Ironically,
all these three brands are produced by InBev, created by the merger of AmBev with
Interbrew. Even though Anhauser-Busch is considered the largest beer company in the
world, facts reveal that InBev is the largest brewer in the world today. This statement is made
due to the reason that the brewing volumes of Tsingtao of China are not clearly available.
Cheap and cheerful or a UK lager classic?
Posted on March 15, 2010 by Andrew
It's a long way from Burton to Brazil
A strange combination is Skol. One of UK lager’s oldest brands, it has been passed from
hand to hand, merrily swapping owners as brewing consolidation caught up with it again
and again. From Burton-brewed to cheap and cheerful discount lager in the UK and
eastern Europe. Mind you, they sell shedloads of it in Brazil, where it is the best selling
beer with around a third of the market.
But it’s a long journey from Burton to Brazil. When the Skol name was introduced in
1959 by Ind Coope, lager consumption in the UK was 500,000 barrels and Skol was on
its way towards the growth that was to take it to being the number one lager brand in the
60s. But while the Scandinavian name was coined in 1959 to compete directly with the
growing imports from Denmark and Germany, Ind Coope’s lager was a re-badging of
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Graham’s Golden Lager brewed in Alloa, Scotland – a brew that began its life in Allsopp’s
in Burton.
In 1897 an ailing Allsopp’s had gambled £80,000 on a lager brewery from New York.
The gamble seemed to pay off as lager became one of the company’s successes. Although
not enough to save it from bankruptcy in 1911. Among those brought in to save it was a
Scot, John Calder, who saw greater opportunities for the brewery in Scotland where lager
sold better. It was transferred in 1921 to Alloa under the care of Archbald Arrol, where
Calder served on the board. Allsopp’s Lager did better under the new management and
reportedly was sold in more than 40 countries.
In 1927, Calder introduced a lighter lager called Graham’s Golden Lager that also did
well at home and during the 30s was stocked by Watney Combe Reid in London.
By 1959, it was time for a change and the new owners of Alloa, Ind Coope (who took it
over in 1934) decided that it was time for a shake-up and a change of name. The change
seemed to work as in 1961 The Economist reported that Skol had a little over a quarter of
the market, slightly ahead of imports and Eddie Taylor’s Carling. The growth was
achieved through increased marketing spend to recoup the investment in capitalintensive lager brewing equipment.
But it wasn’t just to be national expansion for Skol. In 1964, Allied (that had in the
meantime swallowed up Ind Coope) created Skol International Ltd. with Canada’s
Labatt, Pripp-Brygerierna of Sweden and Unibra of Belgium. The grand plan was to
launch Skol as a world-wide brand under license. By 1969, the number of partners had
grown to six with the addition of brewers in Austria and Portugal. The number of
licensees was up to 17 as Skol was marketed in 50 countries.
The results of this partnership were varied, but by far the biggest success was in Brazil.
More on that later.
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Brazilian Battle of the Beers

Add a comment
Charlie Papazian
, Beer Examiner
January 11, 2010 - Like this? Subscribe to get instant updates.
Mega beer brands in Brazil compete on the basis of marketing muscle. Do
they have distinctive characters? Photo by Charlie Papazian
Brazil is not exactly a beer drinker’s paradise. It is home of some of the biggest selling beer
brands in the world and original home of the current management of the world’s largest
brewing company, Anheuser-Busch Inbev. Brazilians love what they have grown to know as
beer.
What is beer in Brazil? To 99.99% of the beer drinking market it is not just light lager. It is
very very light lager that reigns in the minds of Brazilians as simple, mindless and convivial
refreshment. Always served ice cold. There is not another way to enjoy it.
Most of the share of beer mind, beer market and access to it is locked up by AnheuserBusch Inbev with mega brands such as Skol and Brahma and with diminished brands such
as the once competitive (now owned by Anheuser-Busch Inbev) Antarctica. Brazilian
brewed and formulated Stella Artois is positioned as an import; higher priced “premium”
brands such as Bohemia also fill what little shelf and bar space there is after Brahma and
Skol have had their play.
Skol
Companhia Bebidas das Américas (AmBev) came about when Brazilian brewing
giants Brahma and Antarctica merged in 2000. At the time of the merger, the
Skol brand held a 26% market share in Brazil, but AmBev had bigger ambitions
for the brand. The company launched an intensive project to better understand
beer consumers and retailers. Armed with data, AmBev set about building a
powerful targeting and positioning strategy, new distribution channels, new
packaging for bottles and cans, line extensions, and new merchandising and
advertising strategies, carefully testing options along the way. The result was
nothing short of revolutionary. Today, Skol is the #4 brand in the world without a
bottle or can sold in North America. Watch out Budweiser! Update: AmBev
merged with Interbrew to create the world's largest brewer, InBev, and Skol holds
the top position in its home market.
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Beer at water prices - but thirst is waning
1:18 PM Saturday Aug 27, 2011
Czechs are still the undisputed world champions of beer consumption. Photo / AP
With beer prices roughly the same as water, Czechs are the undisputed world leaders in beer
drinking. So, it has been a hit to national pride that their phenomenal thirst has lessened
over the last five years.
But, brewers insist things may be looking up in a country where packed bars and beer
gardens and loud foreigners getting their fill of the national drink are as much a part of the
Prague experience as the architecture and meandering Vltava River.
Early indications give hope the slip might be a hiccup: The beer industry association is
forecasting an increase of one to three per cent in consumption this year.
That would be plenty of beer. According to Credit Suisse's World Map of Beer for 2010, the
Czechs drank per capita a belt-busting 161 litres; Germany was a distant second with 109
litres; the British managed 86 litres, and Americans, 79.
Aussies drink their way through 104.7 litres, while New Zealanders are quite a way down the
world order, with just 75.5 litres.
For Jiri Vesely, the Czech Beer and Malt Association executive director who recommends a
nutritious litre a day for men and two-thirds of that for women, any sign of more beers being
downed is as good an economic indicator as any to prove that consumer sentiment is strong.
"People were afraid that they could perhaps lose their job," Vesely told AP, explaining away
the drop in sales. "We reached the bottom last year and the first half of the year is quite
optimistic."
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He predicts a heady five per cent jump in exports in addition to the encouraging increase at
home. "The horrible weather in the best consumption months July and August scared me. But
I'm sure from the point of the whole year that there will be a slight increase," he said.
Czech statistics are a little more modest than Credit Suisse's, with preliminary figures
pointing to 144 litres drunk per capita for 2010, down from 163.5 litres in 2005 and 150.7
in 2009. That is worrying to brewers and world-renowned brands such as Pilsner Urquell and
Budvar.
Production also dipped and exports fell 10.4 per cent year-on-year in 2009 for the first time
since the country was created after the split of Czechoslovakia in 1993.
At the Pilsner Urquell brewery an hour's drive from Prague, spokesman Jiri Mareck said the
company now exports to 50 markets, with Germany, Slovakia, Britain and the United States
the largest recipients.
"We can leverage more to other countries when the European economy is slowing down," he
said Friday as visitors toured the grounds and drank the product. Underground, amid huge
kegs of beer, water dripped from cold ceilings as a worker held up a candle to check on the
colour and quality of the fermenting pilsner.
Vesely said a 33 per cent increase in excise tax rates since January 2010 has been partly to
blame for declining consumption. But wine is also being drunk more these days much of it
made in the Czech Republic.
Vesely argues wine can't compete, going so far as saying that beer is "one of the most
healthy beverages that people invented."
"But you have to drink it every evening or every day," he said. "It's no use to leave everything
for Friday night."
He believes Czech beer costing little more than a euro in a bar is superior that from other
countries because of a certain "drinkability."
There "something that's difficult to explain and impossible to measure," he said. It's a
"characteristic of beer that makes you drink even if you're not thirsty."
- AP
Copyright ©2011, APN Holdings NZ Limited
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