Marketing

Beer hospitality to drive Europe’s recovery

Some 860,000 jobs were lost in beer hospitality across Europe in 2020 according to the Brewers of Europe, the trade body representing the interests of Europe’s 11,000 breweries.

 

“In aggregate for the whole 2020 (January-December), beer production decreased by over 28 million hectolitres from the previous annual figure, which is a very large drop and similar to the annual production of the Netherlands or Belgium alone" - Brewers of Europe.

“In aggregate for the whole 2020 (January-December), beer production decreased by over 28 million hectolitres from the previous annual figure, which is a very large drop and similar to the annual production of the Netherlands or Belgium alone” – Brewers of Europe.

In its new report on Covid’s impact on the beer trade the Brewers of Europe said that a full recovery can ensure the return of over 800,000 jobs lost in beer hospitality in 2020 when sales in bars, pubs and restaurants collapsed by over 40% due to Europe-wide restrictions and closures.

This led to a 25% decline (of over €13 billion) in beer’s overall value-added to the European Economy and a 23% decline in government beer tax revenues to €36 billion from €47 billion, principally due to €7 billion in lost VAT receipts usually collected through beer hospitality outlets.

The Europe Economics’ Beer Covid Impact Report shows how much the beer hospitality trade has suffered and the impact on the jobs, value and tax revenues generated by beer.

In 2020, on-trade beer volumes dropped 42% compared to 2019, from 126 million HectoLitres to 73 million HL.

With an 8% (20 million HL) increase in retail beer volumes only picking up part of the slack, there was a net fall of 34 million hectolitres or 9% in the total volume of beer sold in Europe in 2020, wiping €3.3 billion off the value of beer production in a single year. Suppliers to the beer sector saw an 8% (€2 billion) fall in beer-related purchases as a result.

“In aggregate for the whole 2020 (January-December), beer production decreased by over 28 million hectolitres from the previous annual figure, which is a very large drop and similar to the annual production of the Netherlands or Belgium alone. This fall can directly be attributed to government restrictions imposed to halt the spread of Covid-19.”

A further €4 billion in government revenues were lost because of the income and social security contributions usually paid by the hundreds of thousands who lost their jobs.

 

Employment

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 (43%) but jobs were also lost in supply and distribution.

“These huge 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,” according to the report.

 

Reopening the beer economy

With continued targeted support governments can expect to receive around €11 billion in extra tax revenues if beer hospitality can just return to pre-pandemic levels of activity.

If the beer value chain bounced back to pre-Covid levels it would bring €13 billion in value-added back into the European economy.

“As we look ahead to the recovery, we need to get the reopening right,” said Pierre-Oliver Bergeron, Secretary General of The Brewers of Europe, “We need clarity and certainty. A thriving hospitality sector is a key to the wider recovery including as an important symbol of consumer confidence.

“With targeted support, beer hospitality can lift the economy, bring in much-needed government revenues and boost jobs all along the brewing, production and hospitality value chain. Bars and pubs can once again become pillars of the local community – and with it, the economy.”

On the other hand, with much of Europe remaining in Lockdown or under tight restrictions, particularly in the hospitality sector, this kickstart is still tantalisingly just out of reach.

As well as government finances, the long wait is having a devastating effect on social lives, livelihoods, culture and the economy generally, according to the report.

With a safe, secure and sustainable future absolutely vital, hospitality venues, event organisers, breweries and the whole supply chain need help to bridge the gap, not just towards first and partial re-openings, but towards full recovery, it stated.

“The Brewers of Europe and our partners have consistently called for support from governments such as prolonged temporary unemployment benefits, flexible liquidity grants, reduced VAT rates in hospitality and targeted excise relief for hard-hit sectors.

“These same governments stand to benefit significantly from a revitalised social economy if they get behind beer hospitality.”

 

Outlook for the future

“In the short term” concludes the report, “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. 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.”

 

 

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