Economy of Beer

In the spring of 2009 Ernst & Young carried out a study on the impact of the production and sale of beer. This study was commissioned by The Brewers of Europe and covered 31 countries in Europe: the EU-27, Norway, Switzerland, Croatia, and Turkey. Our study makes clear that in 2009 beer’s contribution to the European economy is still significant. The main contributions are:

Key findings

In addition to employment, value-added and tax revenues for governments, the brewing sector also generates social benefits to the European countries. Brewing companies are very active in sponsoring a variety of cultural and sports events. Brewing companies are concerned about the well-being of the local communities in which they work and they also invest in the working conditions of their employees. In many countries in Europe, salaries in the brewing sector are also high when compared to most other sectors. Lastly, but probably most importantly, one cannot underestimate the social benefits of groups of friends coming together, often over a beer, to socialise and converse, and the integral role that local bars, pubs and cafés often play in the fabric of local communities across the whole of Europe. Investigating these social benefits, some of which are difficult to quantify, has not been part of our study.

The contributions mentioned above are realised because European breweries produced 427 million hectolitres of beer, and Europeans consumed 394 million hectolitres (one hectolitre equals 100 litres) in 2008. Europe is the number one producer of beer worldwide. The production and consumption of beer has a major impact on other important European sectors. For example, the brewing sector has a strong impact on the agricultural sector from malting barley, which is needed for production of beer, and for the production, marketing and sales processes, and breweries buy goods and services in supplying sectors, mostly within Europe. The annual expenditure of European breweries on goods and services is worth 24.5 billion euros. Mainly as a result of a strong European beer sector, Europe is the number-one producer of hops, malt and malting barley.

Although there are some countries in which the brewing sector is still growing, for example in Eastern Europe where investment in modernising brewing facilities in recent years has led to higher efficiency, there are some developments impacting on the contribution of the beer sector to the European economy. The main developments are:

• Higher production prices
• Economic downturn
• Changing structures of alcohol taxation
• Higher tax burden
• Changing patterns in beer consumption.

These developments have in common that they can influence consumption and production of beer and ultimately affect the contribution of beer to the European economy.