World: Beer market could take six years to fully recover from Covid-19 impact

The international beer market is expected to take six years to fully recover from the impact of the COVID-19 pandemic, the Farm Weekly reported on August 5.

The update on the beer and malt industry was given last week at the Grain Industry Association of Western Australia's (GIWA) 2020 Barley Forum.

Speaking at the event, Boortmalt Asia Pacific regional merchandising manager Simon Robertson said if you took China out of the equation, there was positive growth in the beer market over the past six years, up until 2019.

According to Mr Robertson, that growth was predominantly dominated by the South East Asian markets with key growth seen in Cambodia, Laos, Myanmar, Philippines, Thailand, Vietnam, plus Pakistan and Brazil.

"Almost two billion hectolitres (hl) of beer was consumed in 2019, that's 23 to 24 million tonnes of malt, which is about 26 or 27 mln tonnes of barley," Mr Robertson said.

"In the Asia Pacific (APAC) region for 2019 we saw headline growth of 1.7 per cent, but more specifically the premium sector, which consumes more malt, grew higher at 3.7pc.

"Then 2020 came along and we got hit for six with the impact of COVID-19, we're now forecasting a negative growth of 6.5pc."

In some countries breweries have had to close temporarily, while in others, the sale of alcohol has been banned as they try to get on top of the COVID-19 situation.

On top of that, some breweries, particularly in South East Asia, require experts to come into the country which hasn't been possible due to travel bans.

"Overall we're forecasting a decrease of 125 million hl of beer for 2020 which equates to 1.5mt of malting barley locally," Mr Robertson said.

"We've seen that decline in the months of April, May and June with 30 to 40pc decline in demand over that time period."

The brewing industry in APAC is still relatively fragmented with 55.2pc made up of regional champions and 31.2pc from global players.

There has been talk of an increase in consumption at home, but that is very country dependent.

In countries such as Australia and the United States, the off-trade, which is consuming beer at home, has had some increase.

But looking at that compared to the on-trade, which is restaurants and bars, the loss there is much more significant.

"With restrictions easing at the end of June, we're starting to see a little bit of a pick up into Asia, however beer is a discretionary product and COVID-19 will have a lasting impact," Mr Robertson said.

"We're expecting it will take at least two years to get back to 2019 levels and take six years to fully recover."

Mr Robertson said that prior to COVID-19 they were optimistic about growth and while that growth may not occur in 2020, it will over the next two to five years.

"China has almost 65pc of the brewing capacity in South East Asia, but the growth that we were expecting for countries such as Vietnam, Philippines, Myanmar and Cambodia was 600,000mt of barley over a few years," he said.

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