Austerity Takes Toll on European Beverage Market

The first quarter of 2013 saw little respite from the challenges of last year for the European beverage industry. Increasingly tough austerity measures, price hikes and soaring unemployment rates all continued to take their toll on beverage sales. Even an early Easter provided little stimulus, as an extended period of freezing temperatures across the continent curtailed consumption levels. Canadean’s recently published Quarterly Beverage Tracker reports that West Europe beverage sales declined by nearly 1%, with all countries registering a flat to negative performance. East Europe meanwhile was flat overall, undermined by a sharp contraction in beer sales.
 
Producers and retailers have had to adjust as promotions and heavy discounts become the norm in a bid to lure customers. Many consumers have become increasingly value for money-oriented when buying drinks and opt to trade down. However, some consumers are still willing to indulge, for example by buying a more expensive bottle of wine to drink at home rather than go out.
 
With economic recovery  in the Euro zone looking remote, drinks brands and retailers alike are resigning themselves to a ‘new normal’ of challenging economic conditions. A difficult economy, political unrest in Turkey, taxation and raw material price hikes means that industry leaders have plenty to think about when planning their strategy for the coming year.
 
Recent corporate announcements all point to the challenges ahead, with companies working harder than ever to turn around the trends by adapting and finding new ways to growth.
 
The Timetric report; ‘’2020 Foresight Report: Merchant-Funded Rewards – Challenges and Opportunities for Retail Banks” was published on the 24th May 2013.
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