Cheers!

Post-pandemic beer consumption has rocketed across Latin America.

The COVID-19 pandemic has resulted in an increase in water and beer consumption in Latin America, at the expense of cold drinks and wine, according to a Food & Beverages report by Kantar, a data analysis consulting company.  

In 2021, the global beer market size was USD 763.84 billion which is expected to grow to USD 989.4 billion in 2028. The World Beer Index shows that Panama leads the beer consumption per capita in the region with 372.85 annual 330ml. bottles per person. Brazil ranks in second place with 277.16 bottles per person, followed by Colombia, with 246.31 bottles. 

Latin America is one of the few regions where beer has regained share at the expense of other drinks. For instance, Corona won 900,000 new customers in Mexico; Stella Artois 800,000 in Argentina; and Heineken 400,000 in Chile. AB InBev, the world’s largest brewer, claimed that an 8% increase in beer consumption in Latin America, particularly in Brazil, Colombia, and Mexico, was behind the higher than expected second-quarter earnings. Similarly, Heineken reported that a recovery of sales in Latin America was crucial for the 7.6% rises in sales in the second quarter, improving the 5.73% estimated by analysts. 

A strategy advisor to the management of a large beer company commented, “Beer volumes are up by 5% to 10% across Latin America. The only places that aren’t posting large increases in volumes are Panama and the Caribbean and that’s because volumes are already high in these countries and production capacity is near its limit.” 

The expansion in revenues for these multinational companies results from consumers swallowing up the rise in beer prices caused by higher commodity and energy prices, and logistics disruptions. 

“Prices are rising,” continued the strategy advisor, “we can see this through our affordability measure called Working Minutes to Buy Beer which is the number of minutes the average person must work in order to buy a bottle of beer. ” 

“Prices are rising, we can see this through our affordability measure called Working Minutes to Buy Beer which is the number of minutes the average person must work in order to buy a bottle of beer.” 

Strategy advisor, management of a larger beer company 

It is unclear how long consumers will tolerate price increases in the current context of inflation. However, beer is continuing to grow in popularity among Generation Z and Millennials, forecasting a global growth of the beer market in the forthcoming years. 

A commercial executive for a multinational drinks company commented, “Heineken are raising concerns about inflation. Without raising prices, it is becoming a challenge for them to maintain operating margins above 15% due to inflation and the scarcity of raw materials. So prices will rise but my view is that it won’t have a major influence on the final decision of consumers, who will continue to prefer premium products.” 

“Without raising prices, it is becoming a challenge for them to maintain operating margins above 15% due to inflation and the scarcity of raw materials.” 

Commercial executive, multinational drinks company 

What trends can we expect to see play out in the coming years, beyond price inflation? 

The strategy advisor was clear, “There is a strong and growing strategy to ‘premiumise’ beer. In some countries like Honduras and El Salvador the premium beer segment has grown from 3% to 15%. This aspirational beer category is new but is being driven by consumer demand for quality, new formulations, flavours and taste offerings.” 

Another emerging trend is no/low alcohol beers, “This market is still niche in Latin America,” explained the commercial executive, “but it goes hand in hand with WHO guidelines to reduce the harmful effects of alcohol and receiving some interest.” 

Furthermore, many companies have seen an unprecedented boom in e-commerce and direct-to-consumer channels. Ze Delivery, AB InBev’s cold beer service increased its deliveries from 1.5 million in 2019 to 62 million in 2022. 

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