Liquid gold
The industry at home is thriving too, with sales nearly doubling in the last 10 years and bright prospects for the future. But new government proposals to combat alcoholism by limiting advertising could yet hurt the blooming industry
The most popular Polish beer brands - Tyskie, Lech and Żywiec - are going abroad in increasing volume, followed by a steady stream of smaller beweries. Royal Unibrew recently launched sales of its Łomża and Perła regional beers in stores, pubs and restaurants owned by Poles in the UK, where the bulk of the nearly one million Polish immigrants look to pick up a cold one.
Export expectations
Royal Unibrew's brands want to get the best out of the growing popularity of Polish beer abroad. Last year, 880,000 hectoliters (hl) of beer produced in Poland was sold abroad. Larger producers, grouped in the Union of Brewing Industry Employers (ZPPP), sold 414,000 hl abroad in 2006, increasing their exports by 26 percent year-on-year.
Expectations for this year are high. "This year, the industry will surely export more than one million hl of beer," said ZPPP's director, Danuta Gut.
Poland's largest beer producer, Kompania Piwowarska (KP), sold 200,000 hl of beer abroad during its last financial year, which ended in March. The company's president, Paweł Sudoł, didn't want to predict how much beer the company would export in the new financial year but he made KP's ambitions clear. "We want to sell much more," he said.
Grupa Żywiec, the country's second-largest brewer, saw foreign sales reach the level of 140,000 hl in 2006, with its flagship Żywiec brand amounting to 85 percent of its exported products. "This year we are thinking about selling 180,000 hl [abroad]," stated Grupa Żywiec's export director, Krzysztof Palczewski.
Conquering the natives
Although increased demand for Polish beer is driven by post-accession emigration to other EU countries, representatives of the industry claim that their products have good chances of gaining popularity among the local populations as well. "It turns out that Tyskie is increasingly popular in the UK," Sudoł commented, adding that this could be the result of the brand's success in the Brewing Industry International Awards (BIIA). Tyskie has twice won gold medals during these "Oscars" of the beer industry - as the BIIA are referred to - in 2002 and 2005.
Although Palczewski acknowledges that well over 50 percent of consumers in the company's key markets are of Polish heritage, other nationalities are acquiring a taste for Żywiec. "We are achieving satisfying results in countries without significant Polish populations," he said. Palczewski also added that Grupa Żywiec is exporting beer to 26 countries, including the likes of South Korea, Uganda, Greece, Spain and Portugal.
As 60 percent of beer in the UK is consumed in pubs, having a presence in them is essential for large-scale success. At the moment Polish beer sold in UK pubs are in bottles or cans, so to earn a place among local favorites, Żywiec is planning to market a draught beer. Apart from increasing sales volume in pubs, this move would help clients get accustomed to the brands. But Palczewski stresses that making such a move is difficult and requires additional investments and time. "I would like it to happen this year," he declared, but he makes no promises. However, he said, "Entering [the UK] with kegs is inevitable."
Domestic bliss
The industry has plenty to be cheerful about on the home front as well, as beer consumption is on the rise in Poland. Last year, consumption exceeded 33 million hl, compared to 19 million hl in 1997. ZPPP's Gut is cautiously optimistic about predictions for this year. "We will be satisfied with market growth of three percent," she said, adding that "this is a very cautious prediction." She recalls 2006 when, despite similarly modest growth expectations, the market increased by over seven percent.
Increased sales volume in Poland is reflected in the growing consumption of beer. The average Pole drank about 88 liters in 2006 in comparison to under 70 liters just three years before. "We are getting closer to the European average of around 90 liters," Gut said. According to her estimations, Poland should pass this benchmark in a few years.
The market's prospects for growth are huge. "I think it will continue to grow at the current rate for the next four years and will reach the level of 36-37 million hl," Gut thinks. KP's Sudoł is even more optimistic. "We can think about the 100-liter [per capita] mark," he said, but acknowledged that it would be a long road, especially considering the fact that the market is becoming more and more mature. Sudoł reckons this could happen "not sooner than five years from now."
A warm summer and fall were credited for the growth in beer consumption last year, and with this summer expected to be the warmest in decades, the industry can expect big profits this year. "The weather is the best sales indicator," Gut said. "It's a proven fact that beer has thirst-quenching and cooling qualities," she added. However, she underlined that when temperatures get too high people are less apt to drink alcoholic beverages.
Social drinking
While consumption in Poland is starting to reflect the European average, the Polish market is characterized by a relatively high consumption of canned beer, which represents over 40 percent of the market. At the same time, draught beer accounts for under nine percent of beer consumed in the country, by volume. Also, statistics show that no more than 10 percent of beer in Poland is consumed in pubs, while the figures for the Czech Republic and Belgium are around 80 and 90 percent, respectively.
Gut points out that pub culture - going out and meeting friends over a glass of beer - is relatively new in Poland and doesn't have the tradition it does in the UK or the Czech Republic. But she also points to another, more concrete factor. "The price of beer [in pubs and restaurants] is very high in comparison to beer from supermarket shelves," she says. She doesn't hesitate to say that the restaurant and pub owners are to blame. "One liter of beer as sold by the brewers costs around zł.3," ZPPP's director claims.
The company has introduced smaller, 20-liter kegs (as opposed to the standard 30- and 50-liter varieties), directed at smaller pubs. It is also opening a traditional pub network called Piwiarnia Warecka, of which 16 were opened last year and a further 20 are to be opened in 2007. "We are [still] looking for ideas to encourage Poles to go out more often," said Eliza Panek, Grupa Żywiec's spokesperson, adding that the prices at Piwiarnia Warecka outlets will allow the average Pole to spalsh out.
Hopes and hurdles
With prices of beer ingredients soaring - the price for a tonne of malt has jumped from E250 (zł.955) last year to E400 (zł.1,527) currently - one of the tabloid papers recently spread rumors that the price of beer in the stores could go up by as much as one złoty per bottle. Sudoł downplays such worries. "There will be no large price increases," he says, adding that a rise of a few grosz should be expected. "With the competition we have on the market, no one would be crazy enough to raise the prices drastically," he concluded. KP's president also pointed out that increases in the price of beer have been minimal in the last five to seven years. "Relatively speaking, prices have dropped significantly," he explained, making reference to inflation and cost increases.
Although still five years away, Grupa Żywiec's Panek expects Euro 2012 to have a positive impact on beer consumption in Poland. She notes that even a mature and saturated market like Germany experienced a three-percent sales increase during last year's World Cup. Panek hopes that the prospect of hosting the tournament will increase interest in the game, "which will lead to growing consumption."
Last but not least, the government is working on an amendment to alcoholism-prevention legislation which would make it more difficult to advertise beer. If the legislation comes into force, beer adverts and commercials would not be allowed to have sexual connotations or appeal to professional or personal success and achievements. Beer commercials on TV could not be aired before 11 pm and beer packaging would have to display warning labels similar to those on cigarette packets.
Gut agrees that if the new law would help fight under-aged drinking and drunk-driving, then "its means should be implemented." However, she has some reservations as to whether restrictions on advertising are the right means. "Educating young people and changing citizens' attitudes towards drinking is more important," Gut said. She remarked that the ZPPP had pitched the idea of jointly conducting a survey with the Ministry of Health which would study the relationship between ads, as well as other influences, and drinking habits. "Our proposal was not accepted," she said.
ZPPP's director complains that beer in Poland still does not have the reputation it does in the Czech Republic, for example. As she explained, the Czechs view the tradition of going out to taverns as part of their national heritage. "In Poland we are not even allowed to promote some of the healthful properties of beer," said Gut.
