The Brewers of Europe – which brings together national brewers’ associations from 29 European countries to represent Europe’s 10,000 breweries – highlights the importance of the hospitality sector for the wider beer value chain as it launches its 'TIME TO #RECONNECT' campaign.
“With increased costs, reduced capacity, fewer customers and decreased sales, these establishments, typically very small business, will need targeted, ongoing and continued support as consumer confidence gradually recovers,” says the Brewers of Europe.
Hospitality: the most valuable route to market
Hundreds of thousands of bars, pubs, cafes and restaurants across Europe were forced to closer as a result of the coronavirus pandemic.
These are now starting to reopen: but with changes and restrictions to ensure a safe experience for both consumers and staff.
And this means that the hospitality sector – and as a result the wider brewing industry – remains under pressure.
One in every three beers in Europe is typically consumed in the on-trade: but in value terms the channel is even more significant. “For brewers, this is also by far their most valuable route to market – a beer served in hospitality generates four times the value of the same beer sold in retail – and in the case of many smaller brewers, it is in fact their only way to reach consumers," notes the Brewers of Europe.
The contribution made by beer to the European economy
The EU28 is the second largest beer producer in the world after China, producing over 405 million hectolitres of beer in 2018. Total consumer spending on beer was over €117bn in the EU28 in 2018.
The total contribution of beer to employment was over 2.3 million jobs in 2018: including 130,000 jobs in the brewing sector alone; 255,000 in the supply sector; 1.7 million jobs in the on-trade hospitality sector and 241,000 jobs in off-trade retail sector.
As much as 94% of beer-related employment occurs outside the brewing companies themselves. This means that 1 job in the brewery sector creates an additional 16 jobs in the economy.
The total contribution to value added in the EU28 is around €55 bn - comparable for instance to the total GDP of Croatia.
“For up to three months in many countries, beers were left to languish in bar cellars and brewery storage, ultimately having to be destroyed or repurposed to allow the kegs to be filled with fresh beer for reopening.
“Many breweries switched their business models overnight, to include deliveries, brewery and pub take-aways and online shopping. But with events, festivals and private social gatherings also outlawed in most countries, nearly all the typical beer occasions were taken away. Any uptake in retail sales of beer was limited, short-lived and unable to compensate for the loss of the business through hospitality.
"Some breweries simply stopped brewing, whilst a number of bars will regrettably have already served their last beer.”
While establishments have been eager to reopen as soon as possible, they face challenges in doing so – not least ensuring social distance guidance is respected and thus operating at reduced capacity.
“Despite being open, businesses are going to continue to struggle to overcome the inevitable decline in customer numbers and sales, compared to the buoyant sector we experienced last year. It means that suppliers and employers in the rest of the beer and hospitality value chain will also suffer as a result.”
What can be done?
The Brewers of Europe identifies two key pathways for improving the fortunes of the hospitality sector.
The first is to encourage consumers back in to the on-trade, highlighting the value of meeting spots where people can relax, socialise, and reconnect with family and friends.
“These social hubs and the breweries that supply them are an integral part of the European fabric: its identity, culture, society, tourism and economy, its heritage and its future,” says the organisation.
“As the lockdowns end and citizens are encouraged to once again go out and socialise, it is ‘time to #reconnect’”.
To encourage people back into bars, pubs and restaurants, venues must ensure they go above and beyond in offering the safest experience possible.
The second key pathway is to obtain financial support the sector as it reopens, and The Brewers of Europe is calling on governments to acknowledge the struggles of the on-trade and support it accordingly.
“To ensure a safe and sustainable recovering and support those most hit by the shutdowns, we urge EU, national and local governments to pursue the following options under existing EU legislation:
“A significantly reduced VAT rate in the hospitality sector on the service of food and drinks, including on the supply of products such as beer that are so dependent on hospitality.
“Grants, as well as flexible loans, that support hospitality businesses with sufficient liquidity to survive, reopen in an economically viable manner, and ultimately thrive once again.
“Facilitate the recovery of excise tax paid on unsold beer, and review and reduce tax rates (including for smaller brewers or lower alcohol beers), to allow brewers to finance their support of the hospitality sector and stimulate economic recovery, supporting consumers and the whole brewery value chain.”
Find out more about the campaign at TIME TO #RECONNECT.