Americans and Europeans are ditching beer for healthier drinks

Source: cnbc.com

David Reid

September 28th

Drinks companies are struggling to maintain beer sales in Europe and the U.S. as consumers look to pour themselves a healthier option.

According to Mintel drinks analyst Jonny Forsyth, that drinks firms are increasingly focusing on health and wellness to fill the gap.

“Particularly in developed markets. So we are seeing regions like North America and Europe which used to be a real cash cow for the beer industry, suddenly we are seeing drinking rates decline.

“We are seeing more focus on emerging markets but health and wellness is also spreading to emerging markets, particularly in Asia,” he said Wednesday.

Mintel published a report in January that claimed less than half of Brits drank beer in 2015, while overall sales of lager in the U.K slumped 8 percent from 2010 levels.

Conversely, U.K. sales of carbonated soft drinks are estimated to reach £8,035 million in 2016, up 1.8 percent from £7,890 million in 2015.

Forsyth’s comments come as the finishing touches are being put to the $100 billion takeover by Belgian brewer AB InBev of multi-national rival SABMiller, whose shareholders will vote Wednesday on whether to accept the £45 per share offer.

Forsyth said the deal is part of AB Inbev’s need to dominate in emerging markets.

“The beer market is a difficult place right now and a huge strategy with this deal is that AB InBev really wants to be in pole position in Africa.

Forsyth said African growth potential is enormous, noting that Nigeria is forecast to reach the same population as the United States by 2050.

With beer intake declining, Forsyth said the thirst for soft drinks is growing and firms need to change their product mix.

“It is actually a great time for soft drinks as people look for the healthier option.

“Within soft drinks there are the ones that are seen as bad for you, the sugar-laden ones, but healthier soft drinks such as water, carbonated drinks and cold press are really growing,” he said.

Regarding further deals in the sector, the Mintel analyst said despite claims they are happy as they are, Heineken will find it hard to compete if they stay at their current size.

“I think Heineken are probably going to be increasingly on the outlook for an acquisition. Maybe another brewer but perhaps a soft drink company.