For decades, the beer market has been at the forefront of the beverages industry. With beer sales skyrocketing at an all-time high, it looked nearly impossible for any other player in the beverages sector to stand a chance in the battlefield. However, recent studies from Technavio, have shown that the global beer market is witnessing a slight decline in demand and the key players have to focus on acquisitions and partnerships to stay ahead of the curve.
What Has Sparked the Recent Decline in Beer Sales?
The US – the largest beer market, has been witnessing sluggish demand for beer in the market since 2014. Why has this sudden change hit the beer market in the US?
Let’s take a look at some of the key reasons for this changing trend:
- An increasing number of competitive products
- Heightened customer and retailer requirements
- Tougher access to the market
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How Has the Beer Market Changed over the years?
Wonder how the players in the beer market are coping with the dwindling sales and stagnant demand for beer?
Battling with the Competitors
The past few decades have attracted many new players in the beer market due to the prospering sales and demand for different types of beers in this industry. The competitive pressure has intensified primarily in the premium beer and super premium beer segments, making it difficult for breweries to battle between competitive pressure and volume issues. The high-profit margins involved in these sectors make it less important for niche players to have economies of scale.
Craft beer brewers are now officially beating the big beer makers. This trend is slowly being adopted by European countries such as France, Italy, Czech Republic and Germany. This has prompted craft beer makers to experiment with home-grown innovations, such as flavored beer, to withstand the cut-throat competition in the beer market.
The Retail Shift
Retail stores, such as supermarkets and convenience stores, are becoming increasingly popular for increasing beer sales when compared to bars and specialty stores. Many customers picking up a ready-to-eat meal from a retail store, wouldn’t mind spending a little extra buck on a beer to go with it. This is exactly the segment the beer market players are hoping to tap into through retail stores, smaller pack size, and premium positioning.
Operational and Organizational Shift
Change is inevitable for any industry. The players in the beer market have slowly started to realize the importance of implementing innovative strategies in their operational and organizational verticals in order to improve the dipping beer sales. The players in this market are taking inspiration from FMCG brands such as L’Oréal, Unilever, and Reckitt Benckiser, etc. in adopting cost-saving techniques while procuring, manufacturing, and marketing the products. The beer manufacturers are also looking at possible innovation strategies to give a varied experience to customers and spike sales in the stagnant beer market.