Brau Beviale 2012: Efficient Use Of Raw Materials And Resources

• Nürnberg hosts European beverage industry

• Increasing competitiveness and sparing the environment

Exhibitors and visitors travel to Nürnberg for Brau Beviale a day earlier than previously. The event now starts on Tuesday (13 November), when the some 1,350 exhibitors expect a good 31,500 beverage specialists from all over Europe for three days at the industry’s top capital goods exhibition in 2012. The focus is on information about new developments and improvements in the segments of raw materials, technologies, logistics and marketing. The supporting programme with special shows and forums covers beverage issues in depth and provides food for thought, for example on the efficient use of raw materials and resources. Visitors can also experience how this can improve competitiveness and spare the environment at the same time in the “Energy & Water” theme pavilion with its snappy short presentations on renewable energy, rational energy conversion, cogeneration units, contracting, disinfection, and recovery, analysis and treatment of water. This special show is organized by NürnbergMesse together with the Competence Pool Weihenstephan of Munich Technical University.

Beverage industry must continue to cut costs

Almost before a company has finished presenting its business report, a media representative raises his hand and the usual question follows: Will you raise your prices this year? This is just as likely to be followed by the answer: Yes. This is usually justified by increased raw material prices that can no longer be absorbed and must be passed on to consumers. Undoubtedly, pushing through price increases has a strong impact on a company’s success, but many beverage produces falter especially when it comes to implementing price rises and then suffer from substantially reduced profits by not passing on cost increases.

It is also undoubtedly true that price increases for beer (and petrol) trigger deep-seated psychological reflexes among consumers all over the world. Although increased beer prices have long ceased to cause revolutions, as once the case in Bavaria, price rises still need to considered carefully. It has become established practice, at least in Europe, to justify price rises for beer and drinks to the consumer with increased prices for raw materials. The fact that raw material prices have climbed in the past years is not to be disputed. The price of malt alone has almost doubled for German brewers from 2008 to 2011.

Five megatrends for beverage producers

According to a study by the Dutch Rabobank (“Best of Times, Worst of Times – Global Beverage Outlook”, January 2012), fluctuating or rising prices for raw materials are one of five so-called megatrends that beverage producers see themselves confronted with this year. The other trends, which have an impact on sales planning, are: the still growing importance of the emerging markets, splitting demand between cheap and premium brands, strategic sourcing and convergence between beverage segments.

Rising raw material prices hit beverage producers hard but to a varying extent, according to the Rabobank study. Fluctuations in raw material prices affect the fruit juice producers far more severely than the soft drink bottlers, for example. For fruit juice producers, raw materials – such as oranges and apples – account for between 25 and 50 % of the production costs. Although the soft drink bottlers are less affected by fluctuations in raw material prices, the more than 160 % rise in the price of sugar since 2007 is still a big worry for them. This was why the industry’s big players had to respond by raising their prices by 2 % in the first half of 2011 and by another approx. 1.5 % in the second half-year.

The complete press release can be found here.