COVID-19 Reverses Positive Trend in Brewing Industry

The Union of Brewers in Bulgaria (UBB) would like to express the industry’s concerns arising from the onset of the COVID-19 crisis. Analysts expect the brewing industry to face various economic and social challenges. Still, employers are unanimous that their top priority in this situation is keeping employment in the sector. The industry has already suffered the unfavourable impact of losing 20% of the beer market in Bulgaria due to the closure of bars, pubs, and restaurants. Retail sales have also declined.

“In this situation, the effect of the COVID-19 crisis impacts the operational activities and employment in our enterprises. Some 35-40% of employees in the sector are directly or indirectly employed in the on-trade business, which has stopped functioning amid the emergency measures imposed in the country. Therefore, hundreds of brewery employees need timely and flexible measures to keep their human resources. Just like in 2014, a crisis year for the sector, the main concern of each employer in the brewing industry is to keep their employees and workers, who are the most important and cornerstone asset of our industry,” commented Ivana Radomirova, CEO of UBB.

Read the letter of Pavlos Photiades, President, Brewers of Europe to the EU Leaders about the crisis in the brach.

According to National Insurance Institute (NII) data, last year the Bulgarian beer and malt production industry employed 2,150 people, while the related supply sectors employed over 9,000 people. Together with the people employed in the on-trade business and the retail network, the Bulgarian beer production and sale sector employs about 34,700 people. Every year, the members of UBB invest nearly BGN 8 million (EUR 4 million) in the training and qualification of human resources. NII statistics show that for the past 15 years, the brewing industry has secured the highest income to its employees compared to other agri-food industry sectors. In each of these years, it was one of the Top 10 of economic activities securing the highest average insurance income in Bulgaria.

According to the latest survey carried out by Europe Economics, the added value of the brewing industry in Bulgaria is estimated at EUR 225 million, while the total budget contribution of beer production and sales amounts to EUR 168 million. The analysis of this data indicates that if the industry goes back down to its 2014/15 levels when it hit its lowest for the past 20 years, the sector’s added value will shrink by about 26%. Its budget contribution will go down by at least 10-15%, while employment in the distribution sector and the number of clients will decline by at least 25%.

The trends in the industry we’ve been witnessing for the past month, as the world has been hit by the COVID-19 crisis, highlight not only the state of the Bulgarian brewing industry but also the state of the general European beer sector. Thus, the Brewers of Europe sent an open letter to European institutions, alerting them about the negative effects of the coronavirus crisis on the industry in all EU member states.

According to the data about the EU’s brewing sector, just like in Bulgaria, the industry is hardest hit by the widespread closure and suspension of sales in the so-called on-trade market (hotels, restaurants, cafes, pubs, etc.). For Europe, this means the immediate loss of 35% of the beer market. In turn, the reduced sales and production result in losses down the supply chain – from farmers growing barley and hops, through can and bottle producers, to logistic operators and distributors. Despite the strong stagnation expected in the beer sector, brewers are unanimous in their united and firm support for the measures undertaken by EU member governments to constrain the spread of COVID-19 and protect the health and life of people.

A study by Europe Economics covering all EU member states shows that in 2018 the beer industry secured 2.3 million jobs. Beer production and sales in the EU paid taxes worth EUR 44 billion. The biggest positive effect of the brewing industry is on the development of the on-trade sector with its nearly 2 million places of business, most of which are small, medium-sized and micro-enterprises.

Across the EU, a third of all produced beer is consumed in the on-trade market, but the value of these sales accounts for 65% of the overall beer market, amounting to EUR 76.1 billion (vs. EUR 41.3 billion for retail). What’s even more impressive is that on-trade beer sales in the EU secure over one-and-a-half million jobs, with an added value estimated at EUR 24.2 billion and VAT budget revenues worth EUR 13 billion.

Considering the substantial economic and social contribution of the beer industry in all EU member states and amid the emergency situation we are faced with, the Brewers of Europe are urging authorities to adopt and implement a package of emergency measures to preserve the industry’s viability and reduce the losses and damage on the on-trade business to a minimum. Implementing such measures in a methodic, innovative and meaningful way will not only support these sectors but will also contribute ex-post to the overall economic recovery by creating jobs, added value and budget revenues for EU countries.

About:

The Union of Brewers in Bulgaria (UBB) is a representative organization of Bulgarian brewery industry, malt and hops producers and their raw material suppliers. In 2020, the Union has the following members: Bolyarka VT AD, Britos EOOD, Zagorka AD, Kamenitza AD, Carlsberg Bulgaria AD, Lomsko Pivo AD, Dorovski Invest OOD. Together, they account for 98-99% of beer production in Bulgaria. Once every two years, the UBB and trade unions KNSB and Podkrepa sign a branch collective labour agreement, which obliges all breweries to implement labour standards that are more favourable than the established requirements in terms of remuneration, annual leaves, compensations, OHS, social expenditures, etc. The current branch collective labour agreement has already been filed with the MTF and is expected to cover all brewers in Bulgaria, for the sixth time in a row, by order of the Bulgarian minister of labour and social policy.

The Brewers of Europe is a Brussels-based organization representing the interests of 11,000 brewers. Its members comprise the national brewers’ associations of 29 countries, including 26 EU member states plus Norway, Switzerland, and Turkey. The Union of Brewers in Bulgaria became member of the Brewers of Europe in 2008.


This content is provided by Kamenitza AD, AmCham Bulgaria member.

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