UK: Foreign multinationals companies account for more than 50% of UK beer market

Foreign multinationals have stepped in to dominate UK brewing, including Interbrew (from Belgium), Coors (from the US) and Carlsberg (from Denmark), Research and Markets posted in their last report. Together, these companies account for more than 50% of the UK market, although the overall market leader is a UK-based company (Scottish & Newcastle, with a 27% share of the market). Scottish & Newcastle and Diageo, owner of Guinness, are UK-based multinationals in their own right, demonstrating the trend towards globalization in world brewing and drinks production.

Consolidation of market shares, both nationally and globally, stems from the maturity of the beer markets in most countries. In the UK, beer demand is no better than static in real terms. Demand levels are threatened by healthy lifestyle messages, as well as by competition from wine and other drinks. The national market is shifting towards a smaller number of `flagship' brands, such as Carling, the top `standard' strength lager; Stella Artois, the leading premium lager; and John Smith's, the top ale. However, beer enthusiasts are still able to find wide ranges of premium or regional ales, such as Old Speckled Hen or London Pride, in both pubs and on supermarket shelves.

The UK brewing industry developed along a unique structure, based on the thousands of public houses (pubs) and other drinks outlets that were `tied' to brewers. Although this system of vertical integration remains in place among many regional brewers, national groups came under official attack in the 1990s and, by 2000, most of the groups had been broken up.

Beer distribution has also changed in the 2000s, with supermarkets forcing prices downwards and encouraging take-home drinking. However, pubs and nightclubs, with their higher prices, still account for more than 75% of beer distribution by value. The loosening of the old `tied houses' system means that most pubs are no longer linked to a brewer, although they tend to draw beer supplies from a central pub company (`pubco') or regional brewer.

Although prospects for future growth in the UK beer market are not optimistic (given the dietary and social pressures of the 2000s), the trade is fighting back in 2005 with a major campaign called `Beautiful Beer'. Multinational brewers are also targeting less mature markets, such as the People's Republic of China and Russia, where potential for growth remains.

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