Beer has Direct Link between GDP and Consumption per Capita

In a recent study on Beeronomics by the UBS, a leading Swiss firm providingfinancial services to private, corporate and institutional clients has found that there was a strong relationship between GDP per capita and consumption per capita. The lengthy investment report on the global beer market used historical data and a mathematical formula to analyse how beer volumes relate to the economy.

The report says the correlation between GDP and beer volume growth is highest inemerging markets. Therefore, it sees emerging markets as the sweet spot for global beer.

It also added when economies grew, the beer consumption too kept pace with the growth. It forecasts the emerging markets is where the global beer industry should look for growth in the coming years.

Besides, the study finds along with income rise beer consumption also has shown significant increase. In regards to emerging markets, the increase in wealth has driven a sharp increase in beer consumption.

However, the relationship changes as wealth reaches higher levels as there are limits to how much beer can be consumed per year per person, so consumption levels out. A key point is that in emerging markets, alcohol consumption is generally not affected by wealth.

It assumes when all types of alcohol are included, such as cheap, grey market and home-made alcohols, the curve would be a flat horizontal line. Consumers who rise from poverty to even lower middle class will trade up from low-quality alcohol to a branded product, such as beer.

As of now beer enjoys larger market share at about 54 percent among the overall world market for branded alcohol. The consumer affinity towards beer has seen a downward trend among recession hit North American and West European markets while emerging markets considered beer has the most preferred beverage.

North American beer volumes suffered two torrid years of decline this year and last. It projects that scenario would turn around as the labour market stabilizes given that the average beer drinker in North America is particularly impacted by higher-than-average unemployment.

Similarly, Western Europes beer market has slipped by more than 2 percent a year. And this may come as no surprise - Greece and Ireland are among the weakest. Denmark, too, but the UBS analysts noted that labour disruptions have played a role.

By Jose Roy