The global beer industry remains in fairly good shape, with volume sales up by 2.2% in 2003, according to a new report launched this month. But, the report adds that it is the developing markets that are driving that growth and that China has overtaken the US as the world's largest market.

Euromonitor's new report suggests that developing markets, such as China and Russia, are helping to drive growth in the global beer market.  This growth is underpinned by increasing disposable incomes, rising living standards and greater levels of foreign investment, mainly in the form of strategic alliances with local manufacturers. As a result, China has now overtaken the US as the world's largest beer market, with Euromonitor finding that total volume sales increased by an impressive 41% in China between 1998 and 2003.

The story is very different for mature regional markets such as Australasia, North America and Western Europe, where brewers have been struggling to achieve volume growth.

Natasha Cazin, global beer industry analyst at Euromonitor, said: "The struggle for volume growth in mature markets is due to a combination of factors.  At Euromonitor, we have noticed that consumer confidence is weakening, particularly in the US and Japan, plus consumption habits are also changing, with younger consumers increasingly opting for alternative drinks, such as FABs, over traditional lagers and dark beers".

As a result, most of the major breweries are placing an increased focus on premium beers, making them more visible and more widely available in both retail and on-trade channels.  In the UK, for example, 2003 saw the demise of Heineken Cold Filtered to be replaced by a 5% abv genuinely imported version. Scottish & Newcastle also announced its intention to cease production of several of its economy lager brands, including Hofmeister and Kestral Pilsner, as well as its McEwan's standard lager and Courage Light standard ale brands, in order to focus on the premium segment of the market.

The rise of "light beers" between 1998 and 2003 is another key factor driving growth in the global market, according to Euromonitort. This trend was particularly pronounced in the US, where Bud Light was the best-selling beer in 2002, having supplanted its older sibling, Budweiser, in the previous year. 

"Many US consumers continue to look for reduced calorie beers over their full-calorie counterparts in an effort to control their waistlines" says Natasha Cazin. "The latest industry idea that Euromonitor is noticing, is the move to reinvent light beers as "low-carbohydrate" beers, with Michelob Ultra leading the way", Cazin said.

As "light beers" continue to rise in popularity, so too do niche and speciality beers. These beers are essentially the products of microbreweries with the emphasis on the use of natural ingredients and traditional brewing techniques, and the absence of chemicals associated with large-scale production. Among speciality brews, Euromonitor latest research found that wheat beers were one of the fastest growing product types in 2003, albeit from a very small base.

2003 witnessed a period of unprecedented change in the global brewing industry, with a burst of corporate activity highlighting the apparent urgency of the leading players to build scale in order to remain competitive. The most recent shake-up occurred in March 2004 when Interbrew announced that it had agreed to merge with South American brewing giant AmBev, to become the largest brewing company in the world by volume, displacing Anheuser-Busch.

Euromonitor believes this merger represents a good geographic fit, as AmBev is very well placed throughout South America and is beginning to position itself in the Caribbean, while Interbrew is strong in European and North American markets - especially in Canada and Mexico - and in Asia.

In terms of brands globally, of the top three - Budweiser, Bud Light and Skol - Bud Light was the only brand to gain share in 2002.  With a number of companies having expanded their portfolios to include a low-carb beer, this is one area to watch in the future particularly in Western markets where awareness of obesity levels is gaining momentum.