Beer market could slow down by yearend

The beer market in the first nine months of this year rose by 8.9% against last year, after the summer months once again brought brewers average sales increases of above 5%, according to the information provided by brewers, as quoted by the National Statistics Institute.
Thus, brewers’ nine-month sales topped 17 million hectolitres, while the volume surpassed 15.7 million hectolitres during the January-September period. Having risen by 11.6% in May, 9.8% in June, and 18.3% in July (the highest growth rate the segment witnessed in 2008), the market suddenly dropped by 0.04% in August compared with the same month in 2007. Still, brewers saw sales rebound in September and ended the third quarter with a 10.5% increase.
Even though they registered good results in the second and third quarters, brewers are not highly upbeat about the near future as ad investments by beer industry players were three times lower this September against the same period in 2007, according to Alfa Cont data.
The nine-month performance strengthens the main players’ estimates that pointed to an increase of between 6 and 8% for sold volumes, to over 20 million hectolitres and annual consumption per capita of 95 litres.
Though admitting Romania will not shun the effects of the international crisis, the main brewers say the market will continue to see annual growth of 3-4%, a rate that will lead to the consumption of 110-115 litres of beer per capita.
Still, what impact will the crisis have on the beer market?
“Slowdown in growth comes as a result of the sudden rise in borrowing costs that hurt many distributors. This will have two major effects. Distributors will raise costs, creating panic, and reducing lending to smaller retailers, as they need more cash to cover costs. This is why distributors will focus more on collecting money than on sales,” stated Edwin Botterman, chairman and CEO of Heineken Romania.
Botterman added that consumers would also be hurt as a result of rising interest rates and RON decline.
The beer market in the first three months of this year posted the smallest growth rates since 2005, after April was the first month when the figures the industry registered in the past three years were exceeded. In June, July and August, beer sales saw an average growth rate of 9.4% against the same period of the previous year, with the figure being even better than the one posted in 2007.