NGX | Brewery Sector Update : Sipping for Value - May 2023
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The global beer market sustained its resilient performance in 2022, despite the negative spill-overs from the multiple macroeconomic headwinds that impacted input costs and supply chain in the year. Based on an estimate by Statista, the global beer market expanded 18.2% y/y in 2022 to $643.4bn – the fastest in the last 5 years. This was mainly driven by an estimated 6.4% y/y increase in sales vol- ume to about 964.9 million hectolitres (mhl) and price increases on most brands’ product portfolios in reflection of the surge in the global inflation rate in the year. However, the knock-on effect of the war in Eastern Europe – the spike in raw materials, logistics, and operating costs – drove a sizeable 28.0% y/y jump in the average cost of beer production according to an estimate by Israel-based Social Invest- ment Platform – eToro. Consequently, leading global brands such as AB-InBev and Heineken group reported a decline of 0.1ppt and 19.4% in EBIT margin and PAT, respectively.