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Bottoms up
Business File Special Survey of the Greek beverages industry October 2005 -- The Greek alcoholic beverages industry is worth a whopping EUR 8 billion a year. This value figure has shot up in the past five years by about a third, because of the price hikes implemented by retailers following the introduction of the euro. However, the volume of consumption is growing only modestly at around 2% a year as most sectors are relatively mature. Changes in market shares depend largely on preference or new product launches - both of which are supported by massive advertising and promotion expenditure. Greek per capita consumption of alcoholic beverages is below the EU average, approximately 5.3 litres per capita for spirits (placing Greece 19th) and 40 litres for beer, which is well below the EU average of 80 litres. The entire Greek population drank only 2.6 million hectolitres of the wine produced in the EU 15 from the 2003-2004 crop -- just 2% of total consumption.
But there are particularities. Greece shares the honours with South Korea for the world's highest per capita consumption of
whisky -- the import sells twice as much as domestically produced ouzo -- and the Greek market is something of a bellwether for international trends. The principal companies in the Greek spirits, beer and soft drink sectors are all multinationals. Only the wine sector has not yet attracted foreign investment. The beer trade is dominated two European brewers who, between them, claim 94% market share -- Heineken NV of The Netherlands (83%) and Scottish & Newcastle PLC of the UK (11%). There continues to be domestic production of ouzo, designated by the European Commission as a 'Greek traditional product', but otherwise the spirits market is dominated by imported brands, managed by local subsidiaries of the foreign brand holders. Six companies dominate, only one of which is Greek owned. The wine industry, based as it is on local raw materials, remains in domestic hands. Output is small with total production comprising just 2.3% of total EU production and just 0.2% of its quality output. The business divides between high volume negociants and low-output estate producers with just four firms - Malamatina, Kourtakis, Boutari and Tsantali -- dominating the mass market and the balance shared among 300 smaller companies with production of less than a million bottles a year who make wines of ever-increasing quality - and cost. In soft-drinks the ubiquitous Coca-Cola and PepsiCo are market leaders. The two multinationals have almost complete control of the carbonated subsector (Coca-Cola alone claims 80.8%) and command significant market shares in water and juices. In the water market a local source bottler, Zagori, is market leader but the multinationals Coca-Cola, Nestle and Pepsi occupy the next three places. Coke and Pepsi between them claim 64% of the juice market, though the balance is fragmented between two local dairy companies and many local independent producers. In all sectors there is increasing consolidation to the extent that there have been interventions by the European Commission competition authorities in the spirits sector and inquiries (both in Brussels and in Athens) in soft-drinks and brewing. Greeks are the trade's ideal customers. They drink often but not too much. Many, particularly in the 18-30 age range, go out three or more times a week to meet with friends for one or two drinks. Thereafter many will go on to bouzoukia or clubs to listen to music or dance till the small hours and to continue drinking. But there is little bingeing. Boisterous public behaviour, that in northern Europe is often alcohol-fuelled and leads to belligerence, in Greece is usually a combination of natural ebullience lubricated with a modicum of alcohol. Drunkenness is frowned upon and alcoholism, though it exists, is not a major problem. Until the end of the last century about 75% (possibly more) of all alcoholic drinks were consumed in restaurants, bars and nightclubs -- the so-called on-trade. Latterly, however, as greedy pub and club owners have rounded up their prices in the course of the transition from drachmas to euros while employers have translated salaries at a strict official exchange rate ratio, the on-trade has been diminishing. The proportion of drink bought in shops for consumption at home - the off- trade -- is steadily growing, with the overall split having drifted to 65 on and 35 off (or 55-45) depending upon the sector. As more people eat and entertain at home, the off-trade in wine and beer has grown. Spirits still tend to be consumed in bars and clubs though there has been a drift in the off-trade towards premium brands, as people buy more expensive whiskies and liqueurs to share with friends at home -- particularly on occasions involving a celebration, such as a birthday or anniversary. These are just some of the issues that are dealt with in "Bottoms Up", Business File Special Survey No. 57, October 2005, published in October 2005.
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