- The Office of Competition and Consumer Protection examined the characteristics, relations and level of competition in the Polish beer and hop industry.
- Its biggest problems are: fragmentation of growers and poorly developed hop processing.
According to the latest Eurostat data, more than every tenth half-liter bottle or can of EU beer is produced in our country (approx. 3.7 billion liters). In this respect, Poland ranks third in the European Union – behind Germany (7.6 billion liters) and Spain (3.9 billion liters). This industry has undergone significant changes in recent years. Consumption is changing – it has been decreasing for five years (in 2023 it was 200 million liters lower compared to 2022). Consumer choices are changing – Poles are buying fewer strong beers and those from the highest price range. Many new producers have appeared, offering so-called craft beers. That is why the President of the Office of Competition and Consumer Protection decided to take a closer look at the functioning of this market and the relations that prevail there.
The Office of Competition and Consumer Protection (UOKiK) has investigated Polish breweries. The beer market is dominated by three producers
– We conducted a study, collecting information on the functioning of the domestic beer market and raw materials intended for its production, especially the relations between agricultural producers and intermediaries and entities producing and offering beers. We took a closer look at the level of market concentration and the dynamics of price changes. We also presented recommendations for the industry – says the President of the Office of Competition and Consumer Protection, Tomasz Chróstny.
The study was conducted on 16 selected breweries, including the largest beer producers operating in the country. It also covered hop producers, processors and intermediaries, as well as malt houses, i.e. the main suppliers of raw materials for the production of the drink. The analysis covered the years 2019-2022. In order to illustrate trends, earlier years were also taken into account, including the first full year of Poland's membership in the European Union.
The domestic beer market is dominated by three producers that produce beers on an industrial scale. These are Kompania Piwowarska (known for Lech, Tyskie, Żubr), Grupa Żywiec (Żywiec, Warka, Królewskie) and Carlsberg Polska (Okocim and Kasztelan). In total, these entities were responsible for approx. 80% of beer sales in Poland in 2022 – both in terms of quantity and value. The remaining 13 surveyed beer producers – including the so-called craft ones – achieved a total market share of almost 20%, with the following companies dominating this group: Van Pur SA (including Łomża, Brok) and Perła – Browary Lubelskie SA (Perła, Zwierzyniec).
Despite the growing interest in craft beers (so-called kraft beers), their share in the structure of total beer sales in Poland has not exceeded several percent. This may be due to higher production costs, and consequently a higher price than beers produced on a large scale. Therefore, their susceptibility to changes in consumer purchasing power is also higher.
The increase in beer prices resulted in a reduction in the scale of their sales.
In 2019-2022, the increase in beer prices translated into a reduction in the scale of their sales. This trend affected 11 smaller breweries to a greater extent.
The scale of beer price increases in 2019-2022 varied across breweries, but in most cases it was lower than the inflation rate. This is, on the one hand, the result of strong competition between breweries, but also pressure from retail chains – as mentioned by respondents.
Most breweries emphasized the intensity of competition on the domestic hop market. At the same time, the largest beer producers in Poland largely sourced their hop assortment abroad. Despite the fact that Polish hop prices were lower than those of EU competitors.
Relationships between market participants
The Polish hop and beer market generally operates according to the grower-intermediary or processor-beer producer formula.
The surveyed breweries obtained domestic hops mainly from processors and intermediaries. They did so primarily on the basis of long-term contracts. Occasionally, ad hoc transactions were made, in which the basis for order fulfillment were, for example, emails or online shopping platforms.
Domestic intermediaries purchased fresh or pelleted hops mainly on the basis of ad hoc orders from other intermediaries, often without signing contracts. Processors – suppliers to breweries – purchased raw hops almost exclusively on the basis of contracts with growers.
One of the problems in beer market relations pointed out by producers is the growing power of retail chains.
– While conducting the study, we paid special attention to potential irregularities in the scope of the possibility of annexing contracts, methods of shaping prices or payment terms for completed deliveries. We will analyze these issues in terms of taking possible actions, e.g. within the scope of competences related to combating unfair use of contractual advantage – says the President of the Office of Competition and Consumer Protection, Tomasz Chróstny.
One of the problems in beer market relations pointed out by producers is the growing power of retail chains and purchasing alliances, which exert pressure to reduce prices despite the increase in production costs.
Hop Growers and Processors. What is their position?
The relatively weakest group on the hop and beer market in Poland are growers. Their position is weaker not only in relation to other participants in the Polish market, but also in relation to competitors from Europe. The average hop plantation in the country is several times smaller than in Germany or the Czech Republic. The key global entities operating in the field of cultivation, processing, and intermediation of hop assortment originate from small agricultural producers or entrepreneurs who have developed cooperation for years. The relatively small scale of production of Polish growers makes it difficult to increase added value, and therefore to influence the market and development.
Polish hop growers have limited ability to respond to changing situations, e.g. in terms of consumer preferences or the occurrence of an oversupply of raw materials.
According to the UOKiK analysis, the largest beer producers buy hops abroad, among other things, due to quality requirements. According to some breweries, only a part of Polish hops meets their needs (e.g. in terms of alpha acid content, which is responsible for beer bitterness, among other things). The lower price of hops in Poland is therefore mainly due to the limited possibility of meeting the conditions set by the largest market entities. Both in terms of the properties of the raw material and the form in which it is offered to producers.
One of the most important problems indicated by the industry environment is the costs, quality and scope of domestic hop processing. In addition, according to the respondents, Polish companies purchasing and processing hops are forced to compete with German companies operating in Poland. This means that most of the domestic hop production goes abroad (65% in 2022) – almost exclusively in unprocessed form. On the other hand, granulates and extracts, preferred by most beer producers, are imported to Poland. As a result, this part of the market is not very competitive.
– Increasing the scale of cultivation of individual plantations, using renewable energy sources and energy-saving technologies to optimize production costs, supporting the development of the so-called craft beer segment, but above all cooperation between growers and processors and supporting the promotion and sale of Polish hop varieties or beers on the international stage. These are possible ways to increase the level of competitiveness of the Polish hop and beer industry – says the President of the Office of Competition and Consumer Protection Tomasz Chróstny.
The content of the report together with the recommendations can be found and downloaded on the UOKiK website.
