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These have been difficult times for the global brewing industry. While estimates vary, as the smoke clears, it appears world beer production was down between eight and 10 per cent in 2020, less than some early dire predictions of up to 14 per cent. Certain regions were particularly hard hit, such as Africa, Asia and Europe with output drops of 10 to 15 per cent. North and South America fared better with production down by two to five per cent. In China, the world’s largest brewer, production is estimated to have fallen by eight to 10 per cent, or 30 to 35 million hectolitres. To put this in perspective, Canada’s annual beer production is around 20 million hectolitres. In Japan, beer sales reportedly dropped nine per cent, while in Vietnam, which has a large population and strong beer culture, output is estimated to have fallen by a substantial 14 per cent.

Europe was also hard hit, with beer production estimated to have fallen among the 27 countries of the EU by nine per cent. In the Czech Republic, the largest per capita beer consumer in the world, sales fell eight per cent.  In the Americas, Mexico dropped about five per cent, a relatively mild downturn given the entire brewing industry was shuttered for more than two months during spring of last year. The impact on total beer output in the U.S. was also less pronounced with total production estimated to have fallen by only two to three per cent. In Canada, 2020 beer sales volume dropped by less than one per cent from 2019 according to Beer Canada. This made Canada’s beer industry one of the least impacted in the world from a volume sales standpoint.

A significant increase in retail sales of beer in the U.S. and Canada made up for a substantial portion of the drop in on-premise sales in bars and restaurants as well as concerts and sporting events. This situation resulted in a major increase in sales of canned beer. The U.S. experienced a shortage of aluminum cans in 2020 when canned beer sales rose to 67 per cent of all beer sales from 60 per cent in 2019. On the flip side, bars, restaurants, arenas and stadiums were fully or partially closed for much of the year, which resulted in a dramatic drop in keg sales and a drop in draft beer sales volume to six per cent of total beer sales from 10 per cent in 2019.

While production and sales volume are important indicators of the impact of the pandemic on the beer industry, so is the value of sales. According to the National Beer Wholesalers Association, retail beer sales in the U.S. dropped to $100 billion in 2020 from $120 billion in 2019.

This significant drop in dollar sales reflects the higher price of beer sold in establishments versus retail outlets. This is notable because many breweries have on-site tap rooms. The craft industry in particular has been hit hard as it relies heavily on in-house beer sales for revenue, which is more profitable than moving it through wholesalers. As a result, North American craft brewers have experienced a cash crunch.

The upshot of the pandemic for the Canadian barley value chain was a significant drop in export demand for processed malt in the last half of 2020 and the first half of 2021. Maltsters are only now seeing the light at the end of the tunnel as sales begin to pick up and the backlog of product is shipped. Meanwhile, barley farmers did not feel a similar negative impact as exports of Canadian feed and malting barley were strong in 2020/21 due in particular to demand from China. And with low carryout and drought shrinking crop prospects in many parts of the Prairies in 2021, barley prices are likely to stay firm for the foreseeable future.

Looking forward, the recovery in the global brewing industry in 2021 has begun in many parts of the world, bolstered by summer demand in the Northern Hemisphere. China’s beer production is now estimated to have recovered to close to pre-pandemic levels. Similarly, sales and production are improving in other parts of Asia, Europe and North America.

However, the industry consensus is that 2021 will be a year in which sales are merely rebuilt, as opposed to being a year of growth. Nonetheless, the early signs of recovery are positive. This suggests a possible rebound in the short-term with pent-up demand among consumers for patio pints. As one Canadian malting industry executive commented recently, while we haven’t turned the corner yet, at least we can see it.

Peter Watts is the CMBTC managing director.


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