The European Food and Drink industry
Hearing on
The global financial crisis and industrial changes in
the main European manufacturing and services
sectors
Rodolphe de Looz-Corswarem
Secretary General, The Brewers of Europe
CCMI meeting, 6th February 2009
European Economic and Social Committee
The Brewers of Europe
• Founded in 1958
• It is the voice of the European brewing sector
• 27 national brewing associations in Europe
• Over 95% of the beer brewed in Europe
• Our mission:
Secure brewers’ right to responsibly
brew and market beer
• Beer - part of European food heritage and economy
The European Brewing Sector
• Over 3000 breweries active
• 440 million hectolitres beer brewed in 2007
• 25% of the world’s beer production
• The 4 world leaders are European producers
• Over 2.5 million jobs generated directly and indirectly
• Revenue from all taxes → 39 billion € per year
• 57,5 billion € value added to the European economy
each year
Source: Ernst & Young – The Contribution made by Beer to the European Economy – 2006
Barth/.Haas Report 2007/2008
The European Food and Drink industry
At a glance in 2007
Turnover
Employment
R&D
€ 913 billion
4.3 million people
0.24%
of F&D output
SMEs
Number of companies
Household expenditure
308,000
12.6%
48.5% of the F&D turnover
99.1% of the F&D
companies
EU market share of global exports
19.8% (24.6% in 1998)
Global markets
International Food & Drinks: exports shares
Major trends on food retail markets
• Decrease of food in household expenditure
• Changes in purchase and consumption patterns
• Market share of 5 TOP retailers are above 50% in 12 MS and
above 70% in 5 MS
• Increasing share of private labels and market share of
discounters
• Market shares of discouters increase
• Pressure on prices to consumers
• Limited negotiating power of most manufacturers
Price trends in agricultural markets
Evolution of EU raw material prices since January 2007
600
5000
Price per tonne in euro for Maize, Wheat, Rapeseed,Pork and
Poultry
500
4000
3500
400
3000
300
2500
2000
200
1500
1000
100
500
0
0
2007
2008
Maize
Wheat
Rapeseed
SMP
Butter
Soybean Oil
Pork
Price per tonn in euro for Soybean Oil, SMP, Butter and Beef
4500
80
Jan
Feb
March
April
May
June
July
Aug
Sept
Oct
Nov
Dec
Jan
Feb
March
April
May
June
July
Aug
Sept
Oct
Nov
Dec
Jan
Feb
March
April
May
June
July
Aug
Sept
Oct
Nov
Dec
Jan
Feb
March
April
May
June
July
Cereal, Bread and Oil Price Indices
2005 - 2008
240
220
200
180
160
140
120
100
2005
2006
Wheat
Maize
2007
Bread
Oil price index
2008
Key Crisis Challenges
• Agricultural raw materials: high price volatility
• Long term up-wards trends of agricultural raw material prices
• Energy becoming key factor for competitiveness
•
•
•
•
•
Increased difficulty of access to finance / credits
Reticence for providing Risk coverage / insurance by banks
Inmediate payment demands
Slowing down of exports
Challenge to whole supply chain (logistics, packaging, IT,
etc) as all businesses suffer from crisis
World beer consumption 2002 - 2008
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
2002
1,000,000
2003
800,000
2004
2005
600,000
2006
2007
400,000
2008F
200,000
0
Source: Canadean Global Beer Trends 2008
Recent trends in the brewing sector
• Consolidation of the sector
Top 10 world brewers 2003
53 % world market share
2008 ≥ 64 % world market share
• Investments in logistics, production, variety and quality
• Production efficiency increase (less water and energy)
• Growing presence of micro-breweries
• Reductions in direct employment
• Sales decrease in 4th quarter 2008 – arriving to -8%
• Impact on restaurants, bars, cafés and events
Brewing sector - Public authorities attitude
• Increase of beer taxation
e.g. France, Finland, Latvia, Netherlands, Poland, Ukraine, UK
• Research for revenues by other fiscal measures affecting
the food and drinks, and the brewing sector
• Calls for restrictions in advertising and sponsoring
• Unequal response to brewers’ CSR initiatives in Europe
The brewing sector and the single market
Internal market benefits due to, among others:
- Transport and tourism facilities
- Better coordination in administrative procedures
- Common regulations for food products
- Easier access to raw materials and consumers
Some challenges:
• Diverging labelling provisions across Europe
• Call for restrictions in availability and cross-border shopping
• Different measures for deposit systems and packaging
Thank you