Brau Beviale presents solutions for beverage industry

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europe

Brau Beviale 2011: some 32,000 visitors are expected in the Exhibition Centre Nuremberg from 9–11 November to update on innovations in beverage raw materials, technologies, logistics and marketing from the good 1,300 exhibitors and prepare the ground for appropriate investment decisions. The world's top capital goods exhibition for the beverage industry this year is also valued as a forum for the international exchange of opinions.

The Club of Rome warned of the "Limits to Growth" in 1972, almost 40 years ago. Based on the rise in the world population, industrialization, environmental pollution, raw material consumption and food production, the authors of the study forecast that this development would reach its limits in the foreseeable future. Irrespective of the extent to which the Club of Rome's ecological criticism of growth or the opposing criticism is valid, this issue became more topical again due to the economic crisis of 2008/2009. The constant increase of economic growth established over the last decade was negated within a few months. According to estimates by the World Bank, the economy in the euro zone shrank by a good four per cent in 2009 over 2008 (measured in purchasing power parity). Although the economy recovered slightly last year and achieved 0.7 per cent growth (World Bank), which could rise to 1.3 per cent in 2011, the crisis was undisputedly an enormous shock and exposed a number of fundamental weaknesses of the economy.

The demographic change in Europe is in full swing. The populations of most of the early industrialized countries, such as Germany or France, are aging and shrinking in numbers. Despite continuing immigration, the number of Europeans (incl. Russia and the Ukraine) will decline overall by 41 million from the present 732 to an expected 691 million by 2050. On the other hand, the number of those older than 64 years will rise by an appreciable 70 million from 119 to 189 million. Every fourth European will then be older than 65 years, compared with only every sixth at present (UN Secretariat World Population Prospects, March 2010).

Even though investors and analysts don't want to hear it, Europe's brewers never tire of pointing out that the equation of rising gross domestic product = rising consumption has no longer worked out in Europe for years. Alcohol consumption in most member states of the EU has been declining for decades, as WHO noted with satisfaction in 2010. It states demographic as well as sociocultural reasons for this, and not least changes in consumption habits. The vodka, beer and wine zones once so typical of Europe have disappeared. Wine is growing in popularity in the Nordic countries, whereas wine consumption is dropping in the South and beer is advancing slowly.

Most of the countries of Central and Eastern Europe show a similar development in alcohol consumption. For example, many consumers in Russia have changed from vodka to beer, which caused beer consumption to reach the top mark of almost 80 litres per head in 2007. However, beer consumption has fallen since then – to less than 70 litres in 2011 (Carlsberg Group, February 2011), which is attributed to the economic crisis and the increased beer tax. Carlsberg and its Russian subsidiary Baltika Breweries expect beer production to grow by two to four per cent in 2011, but it appears doubtful that the magic 80-litre mark can ever be topped again if the Russian parliament, the Duma, means business with its stricter alcohol policy.

It's a fact that alcohol consumption is declining constantly in most European countries. At the same time, European brewers are battling against considerable profit problems. The existing surplus capacities caused by the drop in sales and the frequent use of beer in special promotion campaigns are exerting strong pressure on selling prices, as business consultants KPMG wrote some time ago. Nothing has changed in this respect. Even the European beverage industry, with rising sales figures in many cases, is suffering from weak profits. The primary factor in improving the profit situation is to adjust the costs, but this is all the more difficult because the fixed overheads in food production companies are disproportionately high due to the highly intensive use of plant. "Downsizing", the usual top priority, has been modified to "rightsizing" by Europe's beverage producers and brewers. There are plenty of concepts for becoming leaner, but rightsizing in its correct form means improving efficiency at the same time.

The German machinery construction industry recognized energy efficiency as a megatrend at an early stage. The industry is "one of the great hopes for the end of the oil age, " comments Deutsche Bank. In the energy sector, for example, it is said that energy efficiency will be one of the biggest resources for the next 20 to 30 years, according to the World Economic Forum in its Global Risks Report 2011.

Energy reduction is only one part of the European Union's so-called 20-20-20 targets. By 2020, the EU wants to cut CO2 emissions by 20 per cent (compared with 1995), and increase the share of renewable energy and energy efficiency by 20 per cent. But these measures are naturally often difficult and burdensome, and will take different periods of time. The European brewing industry has set itself ambitious targets in this connection. In December 2010, England's brewers announced that they wanted to reduce their CO2 emissions by 17.5 per cent by 2020, which would represent a reduction of 67 per cent over 1990. They also want to press ahead in terms of water consumption, which is to be cut to less than 4 hl/hl of beer – also by 2020. This equates to a reduction of 42 per cent compared with 1990.

The largest international brewing concerns are every bit as good. In March 2011, the world's biggest brewer, Anheuser-Busch InBev, announced plans to cut water consumption in all 133 production locations from 4.04 hl/hl of beer in 2010 to 3.5 hl/hl of beer in 2012. Other brewers are pursuing similarly ambitious targets.

In future, however, it will not just be a question of reduced water consumption or less CO2 emissions, but of optimization in all conceivable areas. These also include the increased use of renewable energy, waste reduction and avoidance, weight reduction of packaging and more efficient use of raw materials. In this way, companies could not only help the environment, but themselves too by reviewing and optimizing all production processes, according to corporate consultants Roland Berger (Green Growth, Green Profit, 2010). In other words, by cutting costs and increasing efficiency, companies can improve their profit situation and gain social acceptance as well. In short, they score in terms of sustainability.

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