Energy and raw materials put beer in crisis: 100,000 workers and a 9.4 billion euro supply chain at risk

The increase in raw materials puts the beer industry in crisis. Worse, it puts at risk a supply chain worth 9.4 billion euros a year with related industries of almost 100,000 workers. The Beer Observatory sounded the alarm with the presentation of the 6th Report “The creation of shared value in the beer sector in Italy”, created by Althesys.

In the last 18 months alone, the price of corn and malted barley has grown by 80 and 95% leading to a 50% increase in production costs, to which must be added the doubled costs of materials, first glass, and packaging as well as quadrupled those of electricity.

And so in 2022, with the same sales values ​​compared to 2021, for breweries the incidence of raw material and energy costs on the value of production increased by 20 percentage points, more than the margins of the sector which last year were at 17.1%: as if to say that the beer industry is working at a loss.

According to Osservatorio Birra, therefore, the consequences for the sector risk affecting the value and employment of the supply chain, but also eliminating that “beer phenomenon” which in ten years has made this drink at the center of Italian gastronomy and sociality. Indeed, according to the association’s estimates, a 5% contraction in revenues – considering that as prices rise, demand falls – would lead to operational losses for almost one out of 2 breweries (48%).

Those same companies which, in the last four years, have invested 250 million euros in plant and human resources and which are coming out of two complex years. The weight of the costs, underlines the research, also risks adding a new increase in excise duties on beer. Furthermore, according to Osservatorio Birra, the effects of the price increases recorded so far will not be limited to 2022 and companies will have to face strong uncertainty next year as well.

Moreover, the research calculates that only 2% of the 9.4 billion of shared value is “retained” by the breweries, the rest is distributed to the workers of the supply chain and to the State: «Every euro of beer sold – we read – has generated 6.4 along the entire supply chain. The downstream phases benefited above all from this (distribution and sale, with 7,341 million euros), while beer brought a substantial contribution to the state coffers: 4,206 million euros between VAT, taxes and contributions on income and labour. Furthermore, the beer supply chain has distributed 2,348 million euros in wages, giving work to over 95,000 families, with a value of about 30 employees for each production employee».

A multiplier effect which, now, risks turning into damage for the entire supply chain.