A small increase in retail beer sales has only picked up part of the slack in Europe: resulting in a net fall of 9% in total beer volume sold in Europe last year and wiping more than €3bn off the value of beer production.
Jobs generated in the beer value chain fell by an estimated one third in 2020, from 2.6 million people to 1.8 million, with the vast majority of these losses being in beer hospitality, but jobs also being lost in supply and distribution.
In Europe, lockdowns and restrictions have varied from country to country. However, what many markets have had in common is the complete shut down of bars, pubs and restaurants over prolonged periods of time.
Europe felt the full impact of the pandemic from March 2020, although regional lockdowns in Italy started in February.
While a number of countries did enjoy some relaxations over the summer (including limited re-opening of the on-trade) many countries returned to heavier restrictions (including closure of the on-trade) in the autumn and winter.
In 2020 beer sold in the on-trade dropped 42% from 126 million hectolitres in 2019 to 73 million hectolitres.
This was offset slightly by an 8% increase (20 million hectolitres) in off-trade beer sales; but nevertheless the net effect was a 9% (34 million hectolitres) fall in the total volume of beer sold in Europe.
This directly wiped over €3bn off the value of beer production in a single year, which in turn fed through to suppliers to the beer sector, who saw an 8% (€2bn) fall in beer-related purchases.
Governments have supported job retention in different ways, making it harder to calculate the precise impact on jobs.
Value added generated, directly and indirectly by the beer sector in Europe has dropped. The overall value reduced due to Covid-19 restrictions is over €15bn, representing a fall of almost 25%. The total taxes paid to governments in Europe was down 23%, mainly driven by the sharp drop of €7bn in on-trade value added tax receipts.
However, The Brewers of Europe’s modelling suggests that the number of jobs created by beer fell from 2.6 million in 2019 to approximately 1.8 million in 2020, a fall of 33% (the equivalent of 860,000 jobs).
The hospitality sector was hit hardest, with more than 4 in 10 beer-generated jobs being wiped out, or almost 43% of employees losing their jobs (or dependent on temporary unemployment benefits).
A further 7.5% fall was seen in the number of jobs generated amongst suppliers to the beer sector. These job losses in some sectors were marginally offset by the creation of 21,000 new jobs in the retail off-trade, a 9% increase in the number of jobs indirectly created by beer in that sector.
The way forward in 2021?
Given the significance of the hospitality industry for the beer industry, The Brewers of Europe has turned its attention to the reopening of the sector.
Getting back to bars, pubs, cafés and festivals with friends, family and the local community will be a symbol of recovery from the Covid-19 pandemic, and will also provide a welcome economic boost to governments (with continued targeted support, governments can expect to receive around €11bn in extra tax revenues if beer hospitality can return to pre-pandemic activity, according to The Brewers of Europe).
While it says clarity and certainty will be key to help operators plan ahead, it also notes that the path ahead will not be straightforward: with mass reopenings ‘still tantalisingly just out of reach’. The UK only opened up bars and restaurants earlier this month – limited to outdoor terraces – while in countries such as France the on-trade remains closed with no fixed date for a reopening.
Vaccination campaigns within the EU have been considerably slower than in the US; while it will be some time yet before tourists from outside Europe are able to return.
On-trade and off-trade: What to expect in 2021
- On-trade beer sales: The on-trade could experience potentially significant improvements in summer 2021 compared with current levels as restrictions are lifted, but social hesitancy coupled with the uncertainty of new coronavirus variants and the possibility of further restrictions may leave sales below 2019 levels in the short term.
- Off-trade beer sales: Short term changes in consumption could be more gradual as retail outlets have not experienced forced-closures to the same extent as hospitality outlets. In the long run, retailers in this sector will progressively lose market share to the hospitality sector. However, some of such consumption might not shift to on-trade, if some of the observed patterns result in a permanent change in consumers’ behaviour and an increase preference of drinking and eating at home.
As noted by the US craft sector earlier this month, the best case scenario for the beer industry in 2021 is that it will be a year of recovery, clawing back the losses of 2020, rather than a year of growth.
“In the short term, the European economy may start its recovery in the summer 2021, if reduced Covid-19 cases and progress in vaccinations allow for a gradual unfreezing of restrictions,” says the Brewers of Europe.
“However, the situation remains very delicate as in many European countries external borders are still closed to tourists. Any recovery will undoubtedly be uneven, gradual and staggered. Depending on the country and the policies imposed by governments, but also consumer confidence, sales of on-trade beer could experience some improvements in summer 2021, but will undoubtedly remain below 2019 levels.
“It remains unclear whether the pandemic will trigger, or accelerate, more fundamental shifts in policies, in business practises and, most importantly, consumption patterns in the medium to long term.”
The full report from the Brewers of Europe on the impact of COVID-19 can be found here.