PUBLIC HEARING

GROWTH POTENTIAL OF THE EUROPEAN

BEER INDUSTRY

The Spanish beer sector and the on-trade

Jacobo Olalla Marañón

Director

Cerveceros de España

Prague, 5th September, 2013

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SPANISH BEER SECTOR

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Spanish Beer Sector:

� 4th biggest beer

producer in Europe

� worlwide top 10

Source: Beer Statistics. 2012 Edition. The Brewers of Europe

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Spanish Beer Sector:

An important contributor to the economy

� Brewing sector turnover: over 3 billion €

� Total contribution to national economy as value added:

around 6 billion €

� Employment : 221,128 direct and indirect job (near 84%

in the on-trade)

� About 4.5 billion € revenue generated as a result of taxes

from the beer chain

Source: The Contribution made by Beer to the European Economy. E&Y 2011.

BEER & THE ECONOMY

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Value Added

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SPAIN Value added due to the production and sale of beer :

5.9 billion euro (12% EUR Value added)

EU Value added due to the production and sale of beer : 50 billion euro

SPAIN : Direct effect brewing industry

21%

20%

56%

3%

21%

14%

63%

2%

Source: The Contribution made by Beer to the European Economy. E&Y 2011.

1.640

10.530

10.06027.840

Figures in the graph(million €)

Figures in the graph(million €)

1.913

1.244

Direct Employment

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EU Direct employment due to beer : 128,800 jobs

Source: The Contribution made by Beer to the European Economy. E&Y 2011.

6.760

Indirect employment

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EU Indirect employment due to beer : 320,000 jobs

SPAIN Indirect employment due to beer : 20,693 jobs (8% EUR indirect employment)

Source: The Contribution made by Beer to the European Economy. E&Y 2011.

39%22%

32%

39%

22%

10%

7%

1%

19%

10%

Total effect on employment

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EU Total employment due to beer : 2 million jobs

SPAIN Total employment due to beer :221,128 jobs (11% EUR employment)

Government Revenues due to Beer

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EU Government revenues

due to the production and sale of beer :

50.6 billion euro

SPAIN Direct effect brewing

industry : 2.4 billion euro

SPAIN Government revenues

due to the production and sale of beer :

4.4 billion euro (near 9% UE revenues)

7%

67%

14%

27%

16%

2%

1%

10%

24%

18%

13%

46%

4%

7%

36%

7%

Direct 326

1.605

tax

ON-TRADE SECTOR

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Don’t miss!

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On-trade:

Main figures in Spain� GDP important contributor: 7%

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Source: Hospitality Spanish Federation (FEHR)

� Evolution by subsectors

� Highest added value chain for foodstuffs

� Bars account to 62% of establishments

� Almost 24.000 bars were closed over this

period(Source: Hospitality Spanish Federation (FEHR))

� Spaniards reduced their expenditure by 4.1%

and the number of visits by 3% in 2012

(Source: Ministry of Agriculture, Foodstuffs and Environment)

2008 2011

Bars Evolution

establishments 246.574 222.840 -10%

output (million €) 59.505 53.658 -10%

Restaurants

establishments 84.879 88.009 4%

output (million €) 25.957 24.725 -5%

Cafés

establishments 15.935 17.675 11%

output (million €) 16.276 15.505 -5%

Catering

establishments 12.912 12.912 0%

output (million €) 9.477 10.351 9%

Hotels

establishments 16.461 16.980 3%

output (million €) 17.102 17.427 2%

TOTAL ESTABLISHMENTS 376.761 358.416 -5%

TOTA OUTPUT 128.317 121.666 -5%

TOTAL JOBS 1.452.500 1.391.950 -4%

(Beer consumption in) Spain is (also) different…

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We enjoy beer in a social manner , with friendsor family,

• Beer is accompanied by some food in every 82% occasion of consumption(Source: Ministry of Agriculture, Foodstuffs and Environment)

• Beer is the favourite drink to have with “tapas”

• Beer is a driver : beer + tapas account to €12 billion

(Source: Joint socioeconomic value of beer+tapas. Eratema 2011)

• Non alcoholic beverages such as water and juices (50.3%) soft drinks (39.3%) and wine (29.2%) are considered as possible drinks to replace beer if it is not available . Only 5% of beer consumers would choose spirits instead (Source: Market Resarch carried out by Quota. August 2013)

• 25% of the income of bars and restaurants is due to beer(Impact on the beer sector of tax modifications in Spain. PWC 2012)

This figure increases to more than 30% if we consider the tandem beer+food

and always with something to eat: whenever there is beer, there is some food

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Beer consumption by channel

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� 63% is consumed in the on-trade� Almost 20% of consumers who visited an on-trade establishment dran k beer� Nevertheless, beer occasions of consumption in the on-trade reduced by 4.5% ,

while consumption in the off-trade increased by 3.5%.� Beer consumption in the on-trade has decreased by 21% along the last 6 years

Source: Ministry of Agriculture, Foodstuffs and Environment

66%

32%

Beer and the hospitality sector

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Employment in the EU hospitality sector due to beer : 1.5 million jobs

Development in the on trade consumptionof beer per country in 2010 compared to 2008

(185.400 jobs)

• Large difference in percentage of on-trade and off trade

consumption by countries

• Over 60% in Ireland, Portugal, Spain and Greece, with high induced

employment

• Nevertheless there is an ongoing trend towards off-trade

consumption:

•On-trade consumption decreased in 20 Member States

•Remained stable in 5

•Only increased in 2 countries

Beer and the hospitality sector

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Volume of beer consumption in million hectolitres (left) and billion euro (right)

37%

63%71%

29%

66%

34%

83%

17%

TOURISM SECTOR IN SPAIN

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Tourism:

Main figures in Spain

� GDP important contributor: 11%

� Spain is still the second largest earner worldwide, after the USA, and the first in

Europe (US$ 56 billion)

� It ranks 4th in the world by arrivals (almost 59 million foreign visitors) spending

700 € per person)

� Sun, sand & sea are yet the first attraction

� More than 300 days of sun a year

� More than 7,900 km of coast

� 551 beaches awarded with a blue flag

� But other attractions are coming up

� Culture (2nd country in the world in terms of cultural protected sites by the

UNESCO World Heritage Centre)

� Environment (2nd country in Europe in terms of natural protected sites)

� Gastronomy (a real boom of Spanish cooks all over the world)

19Sources: Ministry of Industry, Energy and Tourism + WTO

Beer and tourism

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Direct link:on-trade, tourism

and beer sales

�According to our estimations, foreign tourists

purchase of beer accounts to more than 25%

apparent consumption

�89% of foreign visitors drank beer along their

stay (Source: Market Resarch carried out by Quota. August 2013)

�Most beer consumed by foreign visitors (87%)

was drank in the on-trade (Source: Market Resarch carried

out by Quota. August 2013)

What else can be done?

What are we doing?

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WORKING FOR THE BEER CATEGORY FOT THE PURPOSE OF RENFORCING

IMAGE AND ACHIEVING A NEW POSITION IN THE MARKET

� Beer seen as an option not only with ‘tapa’ but also with meals

� New consumption moments by creating links between gastronomy

and kinds of beer

� Beer consumption as a ritual in pubs and restaurants

� Sophisticated and aspirational product

OUR MESSAGES

� Every kind of beer with it own container

� Spanish brands offer consumers many different choices

� Beer combines with every meal and kind of food: Mexican,

Japanese, etc.

� HORECA sector guarantees perfect serve

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New imaginary: a sophisticated drink

“CERVECEAR” CAMPAIGN (Going out for a beer)

WHAT ARE WE DOING?

� Non conventional advertising in key media with beer

consumption in a sophisticated ambiance

� Perfect serve sessions with relevant chefs and bartenders

� Beer and food tasting for key target

� Press trips in order to increase knowledge about culture and

history of beer

� Blogger relations to engage lifestyle and gastronomy

influencers

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Ángel León, Chef con Estrella Michelin

New imaginary: a sophisticated drink

�Major role of the on-trade in the economy

Maintaining a reduced VAT rate

� Beer as a driver in the on-trade and the economy:

a political consensus

• Socialist party’s electoral programme: no increase in the excise rate for

beer , wine and other low alcoholic beverages

• Present government has just increased by 10% the excise rate on alcoholic

beverages but the rate has been maintained for beer, wine and other

fermented beverages

• According to the Ministry of Finance “the on-trade should not be damaged”

and “some products have more negative externalities than other”

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As a conclusion

�Beer is a very relevant hospitality driver

� Strong hospitality sector essential for job creation and growth

�Beer is a major contributor to the economy and society

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THANK YOU VERY MUCH!

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