The beer market has undergone a major transformation in recent years. This is linked to changing consumer expectations, a shift in the structure of trade in Poland towards modern formats and the macroeconomic and regulatory environment. Firstly, consumers expect an increasingly wide range and variety of flavours. The fastest growing segments include flavoured beers and non-alcoholic beers, which results from a more active and health-oriented lifestyle. Grupa Żywiec was the first to recognise the potential of 0.0.% beers and in 2018 launched a wide range of products under as many as 3 brands and the Zero Zone umbrella. Today, this segment already accounts for more than 6% of the market value and continues to grow dynamically. Younger consumers are also looking for beers that are lighter, less bitter than classic lagers often in interesting packaging. Beers such as last year's launch of Żywiec Jasne Lekkie (sales leader for the 2021 season) and Heineken Silver, this year's sales hit, are a response to this trend. In terms of where we buy beer, it is still most often in small, neighbourhood shops, but the biggest dynamics, especially since the COVID pandemic, are recorded by modern formats such as discounters. We have also seen a continuation of the premiumisation of the beer market in recent years, including in the pandemic.
After a pandemic in which beer sales plummeted due to reduced social activity and restrictions on trade operations, the industry is now primarily grappling with unprecedented increases in operating costs. There are soaring in virtually every aspect of the business from energy, raw materials, packaging, transport, labour and financing costs related to interest rate rises. In addition, the industry has recently been hit twice with excise tax increases of 10% in 2020 and 2022. Perturbations in supply chains related to the post-pandemic situation and also the war in Ukraine are also negatively impacting our industry. Drought in the brewing raw material growing regions is also a challenge.
Unfortunately, both COVID, subsequent inflation and now all the macroeconomic factors and the decline in consumer sentiment are negatively affecting beer sales in Poland. Last year, beer sales in Poland were the lowest in 10 years. The beginning of this year was also difficult. We will see how this year's season, which is still ongoing, will turn out.
We are trying our best to respond to changing consumer needs by innovating in growing market segments and at the same time also in the key lager sector. In parallel, the pandemic and now the war in Ukraine has made companies learn to manage the scenario method much better and react quickly and flexibly to changes in the external environment.
Magdalena Brzezińska
Corporate Affairs
Director Grupa Żywiec S.A.
