Beer
is produced by the saccharification of starch and fermentation of
sugar, and is rated among the top three most consumed drinks
worldwide along with water and tea. While hops add the characteristic
bitter flavor to most beer varieties, others are flavored using herbs
or fruits. The main ingredients of beer are water, brewer’s yeasts,
malted barley, and wheat and hops. Beer is categorized into four
segments: dark, lager, non-alcoholic, and stout beer.
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According
to a report by Transparency Market Research, the market for beer in
Latin America and Middle East was valued at US$57.1 bn in 2014 and is
estimated to reach US$77.1 bn by the end of 2021, rising at a healthy
CAGR of 4.40% during the forecast period. Competition in the market
is now stiffer than ever before as SABMiller Plc. recently merged
with Anheuser-Busch InBev in a billion-dollar deal to dominate the
Latin America market.
What
factors are driving and restraining the growth of the beer market in
Latin America and Middle East?
According
to a report by the World Health Organization (WHO), approximately
64.9% of the people in Latin America were obese as of 2013. WHO also
stated in 2010 that the risk of obesity and cardiovascular diseases
in the Middle East is very high with 55.6% of population in the
region suffering from excessive fat around the organs and under the
skin.
Beer
presents an ideal alternative to other alcoholic drinks to these
large populations in Latin America and the Middle East as it has
proven to be beneficial in preventing coronary diseases. Beer is low
in fat content, which aids in preventing high-cholesterol-related
diseases. Growing awareness among the end-users, increasing
disposable incomes of the urban population, changing lifestyle
especially among the youth, and rapid industrialization are some of
the key factors that are driving the Latin America and Middle East
beer market. Additionally, the introduction of organic beer is also
expected to significantly increase the demand for beer in these
regions in the near future.
Conversely,
strict regulations against alcoholic drinks and sensorial profile of
beer such as dizziness and vomiting are the major factors that are
retaining the growth beer
market. In the Middle East, particularly, the presence of
religious restrictions on the consumption of alcohol have led to
rigid views against alcoholic beer. Also, the bitter taste of beer is
also seen as a significant roadblock in the growth of beer market.
This, as a result, has given rise to the production of lager which is
less bitter as compared to dark and stout beer.
Who
are the most prominent companies in the beer market in Middle East
and Latin America and what are their strategies?
Some
of the key players in the beer market in Latin America are SABMiller
Plc., Heineken N.V., Anheuser-Busch InBev, Ambev S.A., and Carlsberg
Group. To keep a stronghold over the market, Anheuser-Busch InBev
recently finalized their takeover of 120-year-old SABMiller Plc., a
company that was investing heavily into efforts to increase their
beer sales in Latin America. The deal is estimated to be worth over
US$1.0 bn. The new company will operate under the name of Newbelco.
Conclusion
The perception that beer is a less-harmful alternate to other alcoholic drinks will help the growth of the market in the Middle East and Latin America. There is because of growing awareness about the benefits of beer among the urban population of Latin America and the Middle East. This augurs reasonably well for the future of the beer market in these regions, although Middle East continues to show slow progress due to stringent Islamic regulations.
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