Economics Assignment

Beer is a fermented alcoholic beverage produced from malted grain, water and yeast and
flavored with hops to impart a bitter flavor. Its moderate consumption can offer several
health benefits, including improving heart health, controlling blood sugar levels, enhancing
bone and muscle strength and minimizing the risk of developing dementia, cancer and heart
attack. As it is a rich source of antioxidants, beer aids in maintaining cholesterol levels,
boosting memory, and preventing kidney stones. It is widely consumed on special occasions,
events and parties and served in restaurants, hotels, micro-breweries,  Pubs, bars and cafes .
At present, manufacturers are relying on kegerators to increase the shelf life and retain the
flavor, aroma, color, and texture of the stored beer.

Beer Market Trends:

Increasing preferences for premium alcoholic beverages on account of the emerging
strend of socializing and parties, especially among millennials, working professionals,
and young adults, represent one of the major factors positively influencing the
demand for beer worldwide. In addition, the rising adoption of beer as a cocktail
ingredient in distilleries is contributing to the market growth. Moreover, the
emerging trend of gifting beer in customized bottles and is contributing to the market
growth. Apart from this, key players are introducing flavored beer in novel variants
like botanical and fruits via e-commerce channels. This, in confluence with the rising
purchase of beer through online distribution channels as they offer easy product
availability with vast catalogs and fast shipping facilities, is providing a positive thrust
to the market. Furthermore, extensive promotional activities and celebrity
endorsements by product manufacturers on social media platforms are anticipated to
positively influence the sales of beer in the coming years.

Top beer producing countries:

China is number one when it comes to beer production. China Res. Snow
Breweries, Tsingtao Brewery Group and Yanking are responsible for 106.9, 80 and
35.3 mill hl respectively, US stands at 2nd position with 211,166,000 hl and Brazil
at 3rd position with 151,900,000 hl.

History of Beer

Before 6000 BCE, beer was made from barley in Sumer and Babylonia. Reliefs on

Egyptian tombs dating from 2400 BCE show that barley or partly germinated barley was
crushed, mixed with water, and dried into cakes. When broken up and mixed with water,
the cakes gave an extract that was fermented by microorganisms accumulated on the
surfaces of fermenting vessels.

The basic techniques of brewing came to Europe from the Middle East. The Roman
historians Pliny and Tacitus (both in the 1st century CE) reported that Saxons, Celts, and
Nordic and Germanic tribes drank ale. In fact, many of the English terms used in brewing
(malt, mash, wort, ale) are Anglo-Saxon in origin. During the Middle Ages the monastic
orders preserved brewing as a craft. Hops were in use in Germany in the 11th century, and
in the 15th century they were introduced into Britain from Holland. In 1420 beer was made
in Germany by a bottom-fermentation process, so called because the yeast tended to sink to
the bottom of the brewing vessel; before that, the type of yeast used tended to rise to the
top of the fermenting product and was allowed to overflow or was manually skimmed.
Brewing was a winter occupation, and ice was used to keep beer cool during the summer
months. Such beer came to be called lager (from German lagern, “to store”). The
term lager is still used to denote beer produced from bottom-fermenting yeast, and the
term ale is now used for top-fermented British types of beer.

The Industrial Revolution brought the mechanization of brewing. Better control over the

process, with the use of the thermometer and saccharometer, was developed in Britain and
transferred to the Continent, where the development of ice-making
and refrigeration equipment in the late 19th century enabled lager beers to be brewed
in summer. In the 1860s the French chemist Louis Pasteur, through his investigations of
fermentation, established many of the microbiological practices still used in brewing. The
Danish botanist Emile Hansen devised methods for growing yeasts in cultures free of
other yeasts and bacteria. This pure-culture technology was taken up quickly by Continental
lager brewers but not until the 20th century by the ale brewers of Britain. Meanwhile,
German-style lagers bottom-fermented by pure yeast cultures became dominant in the
Americas.

top 20 beer-producing countriesEncyclopædia Britannica, Inc.

Brewing in the 21st century is a large-scale industry. Modern breweries use stainless-
steel equipment and computer-controlled automated operations, and they package beer in
metal casks, glass bottles, aluminum cans, and plastic containers. Beers are now exported
worldwide and are produced under license in foreign countries.

The brewing processes

Beer production involves malting, milling, mashing, extract separation, hop addition
and boiling, removal of hops and precipitates, cooling and aeration, fermentation,
separation of yeast from young beer, aging, maturing, and packaging. The object of the
entire process is to convert grain starches to sugar, extract the sugar with water, and then
ferment it with yeast to produce the alcoholic, lightly carbonated beverage.

Price fluctuation:

With prices of barley and other raw materials surging, consumers may have to
start paying more for beer, especially during peak summer. Brewers are seeking
an increase of 10-15 per cent in prices, as per a report by The Economic Times.

In the past year, the price of barley—one of the key ingredients of lager—has
surged 65 per cent. The industry is also dealing with inflated packaging and
transportation costs.  With states individually controlling alcohol prices, some
states such a...

AB InBev, the parent company of Budweiser and Hoegaarden beer, said it has
urged policymakers to allow alcohol manufacturers to increase prices. "We see
commodity and non-commodity price challenges not abating anytime soon... Raw
materials like barle...

According to the report, March-July is the peak season and accounts for 40-45 per
cent of beer sales. This year, the industry has mostly relied on barley produced in
Rajasthan, instead of importing it, said Pramil Jindal, managing director, Barmalt
Malting India.

Ankur Jain, chief executive of Bira 91 said they are “focusing more on cost
management and product mix management to mitigate the impact of rising prices
of key inputs.”

With domestic production of barley being limited, most breweries, distilleries and
malting units rely on imported barley as domestic production is limited, says PK
Jain, chairman, PMV Malting, which supplies malt to AB InBev, Carlsberg and
Heineken.

"Some amounts of adjuncts such as wheat, maize and sorghum are used, but their
usage is limited to 10-15 per cent. There is no reason why beer prices shouldn't go
up,"  Sovan Roy, director-general, All India Brewers' Association, was quoted as
saying...

Just ahead of the crucial summer season, beer companies are on tenterhooks as
there could be a steep increase in prices of barley and disruption of supplies on
account of the Russia-Ukraine crisis. Ukraine is among the top five global
producers of barley, and any major geopolitical crisis in Ukraine could affect
global supplies, industry executives and analysts tracking the sector said.

Ankur Jain, chief executive of premium beer brand Bira 91, said the development
would put further mar ..

The period between March and July accounts for 40-45% of annual beer sales,
and barely is the mainstay ingredient used in beer.

“After two years of a beer drought due to lockdowns in the summer months,
supply chain disruptions due to the Ukraine crisis is an unexpected jolt,” said
Rahul Singh, co-founder of Beer Cafe, which operates over 31 cafes and bars
across India.

Beer companies had forecasted that the industry could grow by 40% year-on-year
in FY23 after two back-to-back summer washouts, on account of Covid-induced
restrictions, and restaurants, bars and clubs being either shut or operating with
limited restrictions.

“We are closely evaluating the situation as it unfolds, and the impact of brewers
in India. If the current situation escalates, it could be a cause for concern,” said
Vinod Giri, director general at Confederation of Indian Alcoholic Beverage
Companies (CIABC).

Even for brewers who source barley locally, prices in India could go up with rise in
global prices and supply disruptions. “Even if beer companies have a blockbuster
June quarter, something that they missed out in the past two consecutive
summers due to disruptions to mobility from the first and second Covid waves,
they could lose their sheen, if margins get significantly affected due to substantial
raw material cost inflation. Escalation in Ukraine crisis co ..

United Breweries, majority owned by Dutch multinational Heineken NV that sells

Kingfisher under the Blue, Ultra and Ice Beer labels, and Simba beer had said they
were optimistic about the June quarter and were working on maximising supplies
on expectations of higher demand, after two bleak summers.

“We have already been operating in a high inflation environment,” a United

Breweries spokesperson said. “With the current crisis, we foresee the pressures
of inflation and supply chain disruptions accelerating in the short term. We are
actively working towards mitigating the impact through a combination of
productivity, cost control, optimisation and judicious price increases for which we
are in conversations with state governments.”

Data by IWSR Drinks Market Analysis shows the beer industry witnessed a steep
decline of 39% to 193 million cases in calendar year 2021.

The escalating tensions between Russia and Ukraine could lead to supply
disruptions and shortages of other commodities such as crude as well, analysts
said. For example, Ukraine is one of the biggest exporters of sunflower oil to India
and Russia is one of the biggest producers of crude oil.