Policy: The Future of Beer

Reading about the future of such a dynamic sector as ‘craft’ beer is exciting. Although, literature up until now has not been particularly exciting and was limited to reports on ‘this year’s beer trends’. This reluctance to look further ahead was the cause of my frustration that eventually led to the writing of Beer Means Business. But times change, and the latest edition of Original Gravity % magazine brings lots of excitement with its feature ‘The Future of Beer’. This collection of views from experts in the domains of products, brewing, materials or technology is really thoughtful and comprehensive, however, it deals with the the results of potential changes but not the actual cause of potential changes.

 

The most influential cause of change is policy making. Policy spreads over many areas that affect businesses throughout the supply chain. These areas include environmental, agricultural, trade or fiscal matters and public health.

Public health policy in relation to alcohol is probably the most influential in effecting change in the nature and patterns of beer consumption. The most obvious way to reduce alcohol related harm is reducing overall alcohol consumption. This is easiest achieved with a two-fold strategy: on the one hand, you can make people who drink, drink less by limiting choice or product availability, raising taxes and thus prices, etc.; on the other hand, you can make people not start drinking at all, which implies the elimination of the products that, in a way or another, are shown to have higher appeal to youth.

The implications of fiscal policy need probably less explanation, as it mainly affects prices through collection of different taxes. Even if there were less pressure on the national economy, excise rates are unlikely to be lowered. In summary, beer price will increase unless it is offset by enhanced efficiency or lessening of burdens somewhere in the supply chain.

The price of beer will also have to relate to the price of ingredients. The demand that influences the price of the main ingredients is growing, and a less reliable climate causes fluctuations in supply. A significant part of the beer market is transitioning into all-malt brews and there are new markets where expanding beer consumption presents an opportunity for global businesses to offset the decline in mature markets. Nevertheless, supplying the beer industry is only one use of land, and the primary food market (prices) as well as relevant policies can influence farmers’ crop choice.

And as far as climate and environment are concerned, as well observed by Dan Lowe (Fourpure) in the feature, there will come a time where targets are set for sectors or businesses in terms of environmental efficiency which will imply investments or payment of penalties.

Although, it is not the businesses that drive policies, businesses will still have influence: involvement in policy making is the best way to stay ahead of changes as opposed to adapt to any new framework. This is the reason why some businesses already undertake initiatives that are likely to be adopted in relevant subsequent policies, e.g. voluntary advertising restriction or labelling codes, environmental management etc. And this is also the reason why some businesses choose to put more strategic emphasis on products that are less prone to the changes of the framework e.g. low-ABV or non-alcoholic beer/beverages.

 


PS: The last chapter of Beer Means Business is dedicated to the future of the beer industry in the UK and is available below. The other chapters of the book will help understand how these conclusions were drawn.

 

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