Beer Quarterly Q3 2022: Diverging Fortunes
In this quarter’s edition, we provide our view on the outlook for beer consumption across several key markets in 2023 and explore some of the downside risk factors. Despite uncertainty and highly fluid situations in each region, it is already clear that some markets will likely be more adversely affected than others.
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From a regional perspective, our analysis suggests that Southeast Asia will see the strongest growth of the markets we’ve reviewed. In contrast, the US and China are expected to see a slight decline in consumption volumes (the decline in the US will be driven more by consumers shifting to spirits than by inflation). Meanwhile, Europe is expected to show the biggest decline, as inflation both raises the cost of production and weighs on consumers’ disposable incomes.
While the differences in demand across regions are likely to be substantial, different brewers within regions may also see widely varying results. Larger brewers are more likely to have better hedging policies and negotiating leverage with suppliers, giving them some advantages over smaller brewers. Moreover, different countries within a region may also face specific challenges. For example, within Europe, countries that have returnable packaging structures in place may have an advantage over countries that rely on (increasingly expensive) one-way packaging options.
Given these challenges, brewers will need to continue to focus on strategies to control costs in this new paradigm and to find innovative new ways to engage consumers.