Beer is produced by the saccharification of starch and fermentation of sugar, and is rated among the top three most consumed drinks worldwide along with water and tea. While hops add the characteristic bitter flavor to most beer varieties, others are flavored using herbs or fruits. The main ingredients of beer are water, brewer’s yeasts, malted barley, and wheat and hops. Beer is categorized into four segments: dark, lager, non-alcoholic, and stout beer.
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According to a report by Transparency Market Research, the market for beer in Latin America and Middle East was valued at US$57.1 bn in 2014 and is estimated to reach US$77.1 bn by the end of 2021, rising at a healthy CAGR of 4.40% during the forecast period. Competition in the market is now stiffer than ever before as SABMiller Plc. recently merged with Anheuser-Busch InBev in a billion-dollar deal to dominate the Latin America market.
What factors are driving and restraining the growth of the beer market in Latin America and Middle East?
According to a report by the World Health Organization (WHO), approximately 64.9% of the people in Latin America were obese as of 2013. WHO also stated in 2010 that the risk of obesity and cardiovascular diseases in the Middle East is very high with 55.6% of population in the region suffering from excessive fat around the organs and under the skin.
Beer presents an ideal alternative to other alcoholic drinks to these large populations in Latin America and the Middle East as it has proven to be beneficial in preventing coronary diseases. Beer is low in fat content, which aids in preventing high-cholesterol-related diseases. Growing awareness among the end-users, increasing disposable incomes of the urban population, changing lifestyle especially among the youth, and rapid industrialization are some of the key factors that are driving the Latin America and Middle East beer market. Additionally, the introduction of organic beer is also expected to significantly increase the demand for beer in these regions in the near future.
Conversely, strict regulations against alcoholic drinks and sensorial profile of beer such as dizziness and vomiting are the major factors that are retaining the growth beer market. In the Middle East, particularly, the presence of religious restrictions on the consumption of alcohol have led to rigid views against alcoholic beer. Also, the bitter taste of beer is also seen as a significant roadblock in the growth of beer market. This, as a result, has given rise to the production of lager which is less bitter as compared to dark and stout beer.
Who are the most prominent companies in the beer market in Middle East and Latin America and what are their strategies?
Some of the key players in the beer market in Latin America are SABMiller Plc., Heineken N.V., Anheuser-Busch InBev, Ambev S.A., and Carlsberg Group. To keep a stronghold over the market, Anheuser-Busch InBev recently finalized their takeover of 120-year-old SABMiller Plc., a company that was investing heavily into efforts to increase their beer sales in Latin America. The deal is estimated to be worth over US$1.0 bn. The new company will operate under the name of Newbelco.
The perception that beer is a less-harmful alternate to other alcoholic drinks will help the growth of the market in the Middle East and Latin America. There is because of growing awareness about the benefits of beer among the urban population of Latin America and the Middle East. This augurs reasonably well for the future of the beer market in these regions, although Middle East continues to show slow progress due to stringent Islamic regulations.
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