Every Pint Has a Silver Lining: four reasons for optimism in a tough year for the beer and cider industry

There’s little point pretending it’s an easy situation for brewers and cider-makers right now. Though economic troubles are universal at this point, these industries have been particularly badly hit. On top of the COVID hangover and broad economic headwinds, those in the beer and cider industries have added vulnerabilities. With utilities bills soaring, both production and on-trade service are much more costly than before. Global squeezes on agricultural production and carbon dioxide supply put added pressure on these industries. And inflation means non-essential products are left off more and more shopping lists.

It's tough. We understand. It would be wrong of us to say anything else.

Nonetheless, we’re not in the business of negativity. Our competitions, including our upcoming ones for beer and cider, are in the spirit of positive promotion rather than doom and gloom. It’s our business to give out medals that celebrate excellence in the drinks industry, alongside a cheap way to promote that excellence both to the trade and consumers. Ultimately, we want to find the positives to accentuate.

And whether our contests are in budget this year or not, we hope that everyone can enjoy some reasons for cheer. Here are some reasons for hope, even if times are challenging.

1) Industry is speaking, and governments are starting to listen

Even if that progress is slow, there is some progress as governments support industries through rocketing fuel bills. Though protection came first for residential bills, governments around the world (but especially in Europe) are realising that businesses will need support to keep thriving. France has recently doubled its pot to protect businesses against price rises while Germany is seriously contemplating paying bills for the month of December. Even in the UK, with its new libertarian Prime Minister, there has been cautious optimism over plans for government support and tax reform.

There is more to do, but it seems that governments are willing to listen and help. While there was concern over the summer that businesses would be forgotten in state aid packages, there is now much more in place to support industry through the winter. With several national trade groups responsible for pressuring authorities, there’s some proof that a united front is working.

The solutions announced are broadly short-term, so we won’t pop the Champagne yet. It is also unlikely to protect all producers. However, with a fast moving economic situation, at least we are seeing concerns listened to.

2) The World Cup to the rescue

There are plenty of reasons – sporting, political, logistical – to disagree with this year’s FIFA World Cup arrangements, but for the beer and cider trade it may have come at just the right time. Although the summer heatwave brought mixed results for the on-trade, as at points it was simply too hot to go out, a warm summer was healthy for the beer and cider sectors in general. Therefore, there wasn’t the same necessity for an anchoring sporting event as in cooler years.

This winter, however, the football is a strong incentive to pull people together in pint-drinking tribes, whether at home or on licensed premises. Pernod Ricard are already making plans for a big up-tick in consumption while Welsh star Gareth Bale has a cannily timed charity beer released this year. Certainly, the early whispers are that the ‘Christmas World Cup’ could be a real boost in industries that traditionally peak in the summer.

Of course, the effect is inherently temporary,?but it’s the sort of bonus that could see producers and sellers through some of the worst of the winter. Even with short advantages like this, the industry could find itself in a stronger state in 2023 than many expected.

3) Premiumisation has its place

Within an overall picture of trouble for the industry, there are pockets which still could manage to thrive. The craft beer and cider sectors looks like they could be quicker to bounce back in terms of sales.

This is a reflection of a number of trends. There is an overall picture of strong growth to factor in, as emerging markets such as East Asia look to craft beer for its innovative flavours, while traditional European markets see the sector’s profile rising. Tied to this is an increased consumer awareness of locality, authenticity and ethical production, all of which are areas in which craft products tend to over-perform. With a higher price tag than non-craft alternatives, these drinks are a revenue stream that can help producers weather economic storms.

Moreover, there is evidence that recessions don’t hit premium products as strongly as others. When sacrifices have to be made, data indicates that consumers would rather 4sacrifice elsewhere in order to maintain these treats. Although this will represent a rebalancing of spending habits, rather than an overall increase, better performance by premium products gives producers a focus that may well reward them in difficult times.

4) Opportunities at lower ABVs

This may seem contrary to the last point (after all, craft beers have a reputation for eye-watering alcohol levels) but there’s little point denying the direction of travel. Lower alcohol options are seeing huge growth across the drinks industry.

We’ve seen this first hand, as we’re now running dedicated competitions for low and no alcohol products both on the wine and spirits sides of our business (plus category distinctions for beer and cider). The beer and cider industries, however, are particularly well placed to take advantage of this long-term trend.

With non-alcoholic beers among the first ‘low and no’ products to break through to the mass market, brewers have a head start in winning over consumers. But even beyond the 0.5% ABV crowd, beers and ciders are at an advantage. Low alcohol options – think table beer and small beer, plus lighter ciders – are part of the everyday landscape in a way that sub-3% wines and spirits simply cannot be. As many seek to cut down, rather than stop drinking completely, these styles have a competitive edge that will only grow.