Beer drinkers are cutting down on visits to bars and restaurants and turning instead to supermarkets. This change is fueling demand for private label beers because stocks are much higher on supermarket shelves than they are behind the bar.
Canadean research suggests that the private label share of total beer consumption is now higher than ever before at over 7 per cent. Private label gained market share rapidly up until 2005 but then its expansion stalled and has only recently picked up again.
Although private label is increasing its share of the total beer market in Western Europe, consumption is not on the rise. Sales volume is expected to fall 1 per cent this year, while the total beer sector in Western Europe is tipped to experience a 3 per cent drop in consumption.
Traditionally, the high proportion of on-premise beer sales has been an impediment to private label growth, preventing it from obtaining the 20 per cent share enjoyed by soft drink equivalents.
Canadean said leading beer brands in Europe are also supported by significant marketing budgets, making it difficult for private label rivals to compete on price alone.
Private label does not pose the same threat to branded products in the beer market as it does in soft drinks.
Nevertheless, Canadean expects private label beers to increase their share of the market as supermarkets continue to outperform bars and restaurants. Another driving factor is the recent spread of hard discounters since the recession began.
Some countries in Western Europe have proved more receptive to private label beer than others. Spain and France are the most open to private label, with market share reaching 15 and 17 per cent respectively.
Canadean said the low level of duty levied on alcohol in both countries gives more scope for price competition between private label and branded beers in these countries.
Furthermore, in France on-premise sales account for only 25 per cent of the beer market, giving private label more opportunities through the supermarket channel than is available in other Western European countries. With more of wine than a beer culture, France is also more likely to view beer as a basic commodity.