Covid-19: assessing the impact on global beer
At this time (in early March 2020) it is simply too early to project the impact of the pandemic with any certainty. It is impossible to know the extent or duration of the epidemic, nor how economies will react to both actual and collateral disruption. With so far limited economic data to go on, it is nevertheless apparent that manufacturing and supply chains are being disrupted, especially as China has been at the centre of the outbreak.
We expect that the hospitality industry will be badly affected in many countries; and while it is possible that output of some goods can be recovered later in the year, beer consumption once lost, tends to stay lost.
Globally, the on-trade accounts for around one-third of all beer consumption. So if globally three months of on-trade consumption were to be lost, this would represent about 8% of the market.
This is not a forecast, but a reasonable ‘worst case scenario’ at this point in time, based on how events are unfolding. We don’t know how people will react to increased restrictions on movement. Will they go to the pub, if the football game has been cancelled? Will they stay at home and drink beer? Will on-trade outlets be forced to close?
We will be reviewing all key market forecasts regularly and we expect to have more data available in the next few weeks. We plan to publish a more detailed update in the next edition of Plato Logic’s On-The-Hop! Gold review, due in early May.
UPDATE: 23rd April 2020
With much of the globe now in lockdown and horeca outlets largely closed, we expect to see a significant impact on the world beer market. Plato Logic are now modelling various scenarios, with our current ‘control model’ showing a decline of around -5.5%, or a loss of more than 100mhl. A more optimistic view still indicates a decline of -4.5%, while our current pessimistic scenario is -10%.
Latest outlook and analysis of different scenarios now available in Plato Logic's On-The-Hop! Gold, published May 6th 2020, available to purchase on the Webshop
UPDATE: July 2020
Although more countries are now exiting lockdown, the prognosis remains very fragile, as infections continue to grow in many countries and there have already been local lockdowns implemented in others. We have therefore modified our outlook to reflect what we believe is likely to be a more gradual drift back to the on-trade.
The control scenario now provides a forecast of -6.5% decline, being the loss of c 125-130mhl globally, while the pessimistic scenario would be for -11.2%. The next 2-3 months are likely to decide which scenario will be closer.
UPDATE: October 2020
The control model, now adjusted to reflect more recent data in a number of core markets, delivers a latest (i.e. as at beginning October 2020) projection of -7.0% across the world, being a loss of 138mhl, or lost revenue of around $US13bn.
UPDATE: December 2020
We are now projecting -7.5% decline for the global Beer Market in 2020 as more countries face lockdowns in Q4.
UPDATE: March 2021
According to Plato Logic's latest data the global Beer Market declined by -6.6% in 2020P. Q4 performed slightly better than expected. For the full year the performance of the 6 largest Beer Markets combined volume significantly outperformed the rest of the world.
UPDATE: August 2021
Our headline summary for the impact of the pandemic on the industry in 2020 is as follows (rounded numbers):
Total beer market -130mhl
Industry value -$20bn
Industry profit -$10bn
Total consumer spend -$100bn