Beer in Spain - 2024 Market Summary
KEY DATA FINDINGS
Total volume sales grow by 1% in 2023 to 3.9 billion litres
Non/low alcohol beer is the best performing category in 2023, with total volume sales rising by 4% to 677 million litres
Mahou SA is the leading player in 2023, with a total volume share of 33%
Total volume sales are set to grow at a CAGR of 1% over the forecast period to 4.0 billion litres
2023 DEVELOPMENTS
Economic pressures and health concerns influence demand for beer in 2023
Beer saw moderate growth in total volume terms in 2023, with much stronger growth in total current value terms. The strong value growth was fuelled by inflationary pressures and an increase in unit prices rather than a significant increase in demand. Despite an almost complete recovery in domestic and inbound tourist numbers in Spain sales of beer through the on-trade remained below pre-pandemic levels in volume terms. In fact, on-trade volume sales fell for the first time since 2020 when severe restrictions were in place due to the pandemic. The decline in consumer purchasing power combined with a sharp rise in the cost of living had a big impact on consumer demand for beer, especially in the on-trade.
With many consumers being under pressure to economise there was a shift back to consuming beer at home in 2023 rather than visiting bars and restaurants. Unit price increases were also more noticeable in the on-trade channel, and the difference in prices became even more visible. The decrease in demand for beer could also be attributed to the health and wellness trend. Consumers in Spain are becoming increasingly health conscious and this is leading to a reduced demand for products containing alcohol. While many people continue to drink beer there has been a growing tendency to drink fewer beer units when going out, with this moderate approach to drinking putting a further dent in sales. Nonetheless, beer remains a very popular alcoholic drink in Spain and players continue to invest in new beer varieties. Additionally, the health and wellness trend continued to fuel demand for non/low alcohol beer, which was the most dynamic category in beer in total volume terms in 2023.
In terms of merger and acquisition news, at the end of 2022, Spanish brewery Damm completed the purchase of British Eagle Brewery, its second overseas brewery, which had been owned by Carlsberg Marston’s Brewing Company. This forms part of Damm’s plans to strengthen its presence in the main foreign markets.
Demand for non/low alcohol beer continues to rise in 2023 as consumers become more health conscious
Spain is the leader in non/low alcohol beer consumption per capita in Western Europe, with the demand for these products continuing to increase at a fast pace in 2023. Both low and non-alcoholic beer experienced an increase in total volume terms in 2023, with non-alcoholic beer leading the way. Spain is a country with a high beer consumption, but increasingly people are choosing products with little or no alcohol. The health and wellness trend has had a big impact on consumer behaviour, especially when it comes to the food and drink they choose to consume. This increased demand for non-alcoholic beer is noticeable in bars, where you increasingly hear people asking for more non-alcoholic products, as well as through the increased availability of products and brands in retailers.
On top of being the largest producer and consumer of non-alcoholic beer, Spain also offers many varieties of non-alcoholic beer, including black IPAs, craft beer, premium options, and more. Furthermore, most bars now offer non-alcoholic beer on tap. Low alcohol beer is a smaller category and continued to see slower growth than non-alcoholic beer in 2023. Beer already has a relatively low alcohol content compared to other alcoholic drinks and therefore many consumers are yet to clearly see the benefits, while some consumers even avoid it as they perceive low alcohol beer to have an inferior taste. Some of the new product developments within non-alcoholic beer in 2023 included Mercadona’s new private label 0.0% beer. Another example is the Belgian Thrive Peak brand, which was founded in 2021 and which can now be acquired in Spain. This innovative non-alcoholic beer is designed for sports enthusiasts with it being formulated with the perfect balance of protein and carbs.
The rise of the ‘tardeo’ trend has implications for the on-trade channel
The on-trade consumption of beer failed to reach pre-pandemic levels in volume terms in 2023. Beer consumption has increasingly taken on a social dimension, particularly in the wake of the pandemic. Nonetheless, the prevailing health and wellness trends have exerted influence upon consumers, prompting heightened vigilance regarding the quantity of alcoholic beverages they consume. In line with this, the concept of ‘tardeo’ continues to gain popularity whereby people in Spain are shifting their consumption occasions from night to the afternoon.
Following two years of lockdowns and restrictions there was a notable escalation in consumer demand for social occasions, significantly influencing on-trade consumption patterns. Nonetheless, this trend also led to a shift in the perception surrounding alcohol consumption. As ‘tardeo’ became increasingly common, consumers tended to drink fewer drinks per occasion, often just a single beer. ‘Tardeo’ is typically an after-work or afternoon occasion, which means that people return home, often driving their cars. This along with the Spanish government’s increased efforts to prevent drink driving put downward pressure on sales of beer through the on-trade in 2023.
To tackle the issue of drink driving, the General Directorate of Traffic (DGT) some modifications were carried out in the Royal Legislative Decree 6/2015, of 30 October 2022, which approved the consolidated text of the Law on Traffic, Circulation of Motor Vehicles and Road Safety. These measures were taken to strengthen prevention measures and sanctions related to alcohol consumption while driving. This served to limit the amount of beer drivers consumed in on-trade outlets, with some consumers switching to drinking at home.
PROSPECTS AND OPPORTUNITIES
Sustainability a growing focus for consumers and breweries
Sustainability continues to have a growing influence on the alcoholic drinks industry and breweries and those involved in the sale and distribution of beer have been reinforcing their commitment to reducing their carbon footprint. For instance, breweries are prioritising the use of renewable energy, waste utilisation, and reuseable containers throughout their value chain, from cultivation to consumer. With growing awareness and concerns around the environmental impact of their purchasing decisions consumers are becoming more demanding in terms of the need for transparency both in terms of how products are produced but also the ingredients that are used. Government and regulatory bodies also continue to impose stricter environmental regulations on businesses which they are obliged to follow.
Under pressure to conform with these regulatory issues and the growing consumer demand breweries are investing in innovation both in terms of their products but also their processes. For instance, in 2022 Damm obtained a 'Zero Waste' certificate from AENOR for its facilities in El Prat de Llobregat (Barcelona), having managed to recover 98% of the by-products generated in its facilities, thus joining the company's other six production plants that already had this distinction. In 2022, Hijos de Ribera also increased the percentage of waste recovered in its plants, contributing to the 'Zero Waste' objective that the brand hopes to achieve soon. In addition, the company uses recycled and recyclable materials, whilst looking for innovative solutions to continue advancing in circularity. For instance, in 2022, it launched Milk Stout, a beer made with lactose from the milk of Galician cows fed with bagasse waste from its factory. Meanwhile, Mahou renewed its 'Vamos 2030' sustainability plan in 2023, with it allocating EUR48 million to fulfilling this plan. The company has shared its ambition to continue promoting actions such as the presentation of the '1925' refillable format and the initiative to eliminate plastic from the secondary packaging of its cans, an action that has already started at its Alovera plant and which the company plans to extend to the rest of its business by the end of 2024.
Flavour innovation expected to become more commonplace in beer
A lot of innovation in beer is expected to come from experimentation with flavours over the forecast period. Flavoured beer is still niche in proportion to the amount of beer consumed in the country. ‘Clara’ (a shandy) is very popular in Spain, with this being a mix of beer with lemonade, traditionally made by combining both drinks. It has also been developed into a new type of lemon beer that is pre-prepared. This beer is usually lighter and contains less alcohol. As consumers increasingly look for low alcohol drinks and fruitier options there is an opportunity for these products to grow. Mahou has also ventured into a new area with its innovative Mahou Rosé which combines beer with rosé wine. The new Mahou Rosé and its red fruit flavour is available both in the on-trade and off-trade channel and through the company's own e-commerce store in both bottles and 33cl cans formats.
Flavour innovations are also expected to be seen in the dynamic non-alcoholic beer category. For example, Heineken launched Cruzcampo Gran Reserva 0.0% in 2023 which is a premium proposal made with roasted malts and is designed to satisfy consumers who choose to avoid alcohol without giving up the intense flavour of beer. Hence, innovation based on experimentation with traditional flavours is also expected.
Prevailing economic uncertainty could limit growth opportunities for the on-trade in the short term
On-trade volume sales of beer are not expected to recover to pre-pandemic levels before the end of the forecast period, with only moderate growth being projected. The pandemic left a mark on the on-trade channel even though beer is amongst the best-performing categories in Spain. Consumers have changed their drinking habits and are now increasingly seeking out healthier alternatives. A beneficiary of this trend is non-alcoholic beer which is projected to remain one of the most dynamic categories over the forecast period, both in the on-trade and off-trade channels.
Regarding beer with alcohol, there are better prospects for the off-trade than the on-trade. In the short term, on-trade sales will likely continue to be negatively impacted by the decline in consumer purchasing power after the economic hardship that arose from the pandemic, geopolitical uncertainties, supply chain disruptions, and product shortages. Furthermore, the main beer players have announced that beer prices are not expected to decline in the near future. Craft beer producers have suffered the most from the consequences of the pandemic and inflation and it may take some time before they start to see visible signs of improvement.
CATEGORY BACKGROUND
Lager price band methodology
The premium price range in lager includes imported brands such as Heineken, Corona, Carlsberg, and Paulaner, and domestic beer such as Mahou Cinco Estrellas, Estrella Galicia, and Voll Damm. Mid-priced brands include Estrella Damm, Cruzcampo, Mahou Clasica, San Miguel Especial, and Amstel. Economy brands include private label lines, such as those from Mercadona (Steinburg) and Carrefour, as well as economy brands from domestic manufacturers, such as Xibeca Damm and Adlerbrau.