vladimir balach, generalsecretaryof cbma · • cbma represents interests of breweries, malt houses...

Czech beer market development

Vladimir Balach, General Secretary of CBMA

CZECH BEER AND MALT ASSOCIATIONČESKÝ SVAZ PIVOVARŮ A SLADOVEN

Czech Beer and Malt Association

• CBMA represents interests of breweries, malt houses and other suppliers and partners in beer sector

• One of the oldest beer associations in Europe

• Former “Society for beer industry in Czech Kingdom was established in 1873

• CMBA Ethical code and self-regulation process

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Breweries in the Czech market

• Czech beer market is diversified represented by breweries of all sizes from large international brewers to small local breweries

• 6 large brewing companies (Pilsner Urquell, Staropramen Brewery, Heineken, Budweiser Budvar, Lobkowitz Brewery, Moravian-Silesian Brewery)

• 27 individual small to mid-size breweries

• Boom of mini and restaurant breweries – in 2012 there were registered approximately 160

3


Current situation on beer domestic market

• The brewing industry, affected by the economic crisis, has faced an

unprecedented decline in beer output following the excise tax increase

• After two years of significant decline in total production this trend stopped

in 2011

• In 2012 total beer production increased slightly by 2,75%

• Production for the domestic market increased only by 1,4 %, fueled mostly

by beer mixes growth

• Malt production copies trend of beer 2012 – 526 kt

• Hops production est. 2013 – 4 700 t

4


Structure of breweries in the Czech market

0

50

100

150

200

250

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Yearly production ≤ 1.000 hl

Production > 1.000 hl and ≤ 50.000 hlProduction > 50.000 hl and ≤ 200.000 hl Production >200.000hl

Total number ofbreweries

5


Structure of breweries in the Czech market

Breweries in the Czech Republic 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Total number of breweries

(including microbreweries) 89 90 91 100 126 128 133 151 191 213

Number of brewing companies

Yearly production ≤ 1.000 hl

(microbreweries) 35 36 36 41 66 57 51 65 90 20

Yearly production > 1.000 hl and ≤

50.000 hl 18 18 15 20 22 31 49 48 70 158

Yearly production > 50.000 hl and

≤ 200.000 hl 16 16 18 19 19 20 8 12 9 11

Yearly production > 200.000hl9 9 10 10 9 7 8 10 8 8

Total number of brewing

companies 78 79 79 90 116 115 116 135 177 197

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Total beer production in the Czech Republic

9.245

11.418

16.27617.475

19.198

17.924

19.787 19.897 19.80618.637

16 180* 16 705*

18.591

176

129

104

7971

5748 47 47 47 47 47 47

0

20

40

60

80

100

120

140

160

180

200

0

5.000

10.000

15.000

20.000

25.000

1950 1960 1970 1980 1990 2000 2006 2007 2008 2009 2010 2011 2012

Beer production in thousands hl Number of active breweries

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Beer production for domestic market

-0,3%

1,6%2,0%

1,1%1,7%

3,8%

0,1%

-0,5%

-5,9%

-8,6%

2,6%

1,4%

-10,0%

-8,0%

-6,0%

-4,0%

-2,0%

0,0%

2,0%

4,0%

6,0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

8


Trends Czech malting industry (in kt)

166

281

314

351

428

475

521 528541

518499

522 526

83

141

114 106

148

208

263

233244 244 241

279

258

0

100

200

300

400

500

600

1950 1960 1970 1980 1990 2000 2006 2007 2008 2009 2010 2011 2012

Production Export

9


Surface hop-field and hop production in the Czech republic

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

11 000

12 000

13 000

14 000

15 000

Hop production (t)

Surface hop-field (ha)

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Market development, change in consumer demand

• The long tradition of drinking almost only lagers in the CzechRepublic has changed. It was built on the traditions of the famousCzech brewing, dominated by the pilsner-type lager.

• In the last few years, consumer demand has evolved. One of thetrends is a shift from the HORECA segment towards in-home-consumption.

• The group of older consumers still prefers Czech lager as thedominant type of beer. The pub is the preferred style of socializingfor them.

• Younger consumers prefer a variety of choices: variety in beveragechoice, variety in packaging for different occasions anddifferentiated consumer experience.

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Beer consumption per capita (in liters)

159

156

158,8

160,9

157,9

156,5

158,1158,8

154

144 144145

144

135

140

145

150

155

160

165

12


Consumption of beer across distribution channels

51%43%

49% 57%

0%

10%

20%30%

40%

50%

60%70%

80%

90%100%

2009 2012

On-trade Off-trade

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Consumption by type of beer

54,89%

38,05%

7,06%

2012

Tap beer

Lagers

Other

62,30%

32,60%

5,10%

2009

Tap beer

Lagers

Other

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Consumption of Czech beer among tourists

While Czechs drink at average one small beer a day (0,3l), tourists drink almost two large beers a day (0,9l)

∅∅∅∅ Tourists consumption of beer (L/person/day) Tourists consume in the Czech Republic in total 40 million large beers (20 mil. liters)

15


Overall impact of Czech brewing sector

SUPPLIERS

• Farmers• Utility • Construction industry• Chemical industry• Logistics services• Etc.

BREWERIES

• Microbreweries• Minibreweries• Large breweries• Malt producers

HORECA +

RETAIL

• Pubs• Restaurants• Cafes• Retail• Wholesale• ChainsC

ZK 2

5bn

Ta

x p

aym

ents

55,000 employees

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� 7,600 employees directly employed in the brewing sector *

� 90 – 95%of raw materials come from Czech Republic

� Support for Czech farmers – barley, hops

Czech beer brewed using Czech ingredients

� Beer for the czech market produced exclusivelywithin Czech Republic

*SOURCE 12: The Contribution made by Beer to the European Economy (Full Report – Edition 2009) prepared by Ernst & Young (pp. 55, 57 and 59)

Direct impact of Czechbrewingsector

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� 12,500 indirect employees* at SUPPLIERS

� 34,600 employees in HORECA and RETAIL* sectors

� CZK14bln payments go to suppliers fromCzech brewing sector (91% of the amount stays in Czech republic*)

� The largest portion of revenue fromsales in HORECA (25%) is frombeer (hotels, restaurants, cafés)

*SOURCE 12: The Contribution made by Beer to the European Economy (Full Report – Edition 2009) prepared by Ernst & Young (p.55)

Indirect impact of Czechbrewingsector

18


CZK 10,8bn - to the State Budget � Excise tax, VAT, legal entities tax, employees

income tax, other*

CZK 6,8bn - indirect tax-related revenues � Through suppliers sector*

Contributionof Czechbrewingsector

*SOURCE 12: The Contribution made by Beer to the European Economy (Full Report – Edition 2009) prepared by Ernst & Young (pp. 55, 57 and 59)

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Czech Beer and Malt Association (CBMA)INITIATIVE

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Protected geographical indication Czech beer

• PGI Czech beer registered in 2008• Used by 16 breweries for 77 beer trademarks• Strict control of compliance with many requirements, e.g.

– 80 % of malt pouring per brewing is made of spring barley of recommended sorts

– 30 % of hops per brewing has to be hops from Žatec and its recommended clones etc.

Main benefits:

• Quality guarantee for consumers• Protection against bad competition• Guarantee of stable demand for raw material suppliers• Support of export and tourism

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New research on composition of Czech beer from VÚPS

• Screening of selected health beneficial substances in Czech andforeign beers

• Compared representation of controlled substances in Czech andforeign lagers

Czech beer contains elevated concentrations of:

• B vitamins

• oligosaccharides and higher dextrins

• polyphenolic substances

• bitter substances

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Czech Beer &Malt Association (CBMA) Ethical Code

CBMA Ethical Code▪ More strict than national self-regulation code

Self-regulation process▪ Complaint is given by any brewery▪ RBI give the recommendation to the Presidium of

CBMA▪ The decision should be done until 10 days▪ If doubts the last arbiter is National self-regulatory

body

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As long as I drive, I drink non-alcoholic beer !Project scope

▪Czech Beer and Malt Association (CBMA)signed Memorandum about cooperationwith Czech Police▪Objective of cooperation is related to the

traffic safety improvement, especially in thearea of drinking and driving▪CBMA members together with police award

„responsible drivers“

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Czech beer market in a nutshell and treasure

• Beer is an important part of Czech Culture

• We take pride in it both at home and abroad

• More than 2/3 of all beers produced worldwide are of Czech, the “Pils” type

• Increased choices for consumers, but with constantly high quality and taste richness

• Development of beer domestic market is limited by the high consumption (expected gentle decline)

• Czech beer is one of the pillars of the Czech Republic brand

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Czech Republic brand pillars

Skoda

Ice-hockey

Czech beer

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Thank you!

www.ceske-pivo.cz

vladimir balach, generalsecretaryof cbma · • cbma represents interests of breweries, malt houses...

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