At the end of June, students of a center in Manresa (Barcelona) celebrate the end of the course. Soft drinks for kids and beers for adults to make the hot event more bearable. The brand chosen by the event organizers is Estrella Galicia. At the heart of the traditional feudalism of Estrella Damm, Catalonia’s best beer, a product made right at the other end of the country, is consumed. This anecdote illustrates how brewing groups, traditionally highly localized in their place of origin, convey their struggle to expand their market share across the entire national territory. And the battle is also played out on supermarket shelves, where some brands are stacked on top of others and different varieties are offered to customers, from roasted to historic Indian Pale Ale (IPA). “It’s a sign that the industry is having a great moment and is solidifying. It’s getting more and more competitive,” says Jacobo Olalla, managing director of the Spanish Brewers association, which brings together the main producers.
From family businesses to multinational groups and independent producers, they round out Spain’s diverse map of beer production. Major companies in the industry billed 4,700 million in fiscal 2021 despite restrictions due to the pandemic. Despite the high inflation, which shows the strength of the sector, many brands continued to grow in 2022.. Mahou closed the year with a turnover of 1,743 million, an increase of 18.4% and a historical record. In the case of the Damm group, sales were up 26% year-on-year to 1.876 million. For Hijos de Rivera, owner of Estrella Galicia, the turnover also reached about 20%, or 700 million euros. In the case of Ágora, the Aragonese group that owns Ámbar, sales of up to 212.5 million were achieved, 25% more than in 2021.
Cerveceros de España, an organization representing the makers of this beverage, confirms that 2022 is the year of recovery after Covid, which has been particularly difficult for brewers as the hotel industry has shut down. The sector managed to increase its production by 7.9% to 41.1 million hectoliters in 2022. Since approximately 90% of the beer produced in Spain is consumed in the region, each company’s market share in Spain corresponds to a large extent on its own production.. In 2022, the group producing the most beer was Mahou with 12.8 million hectoliters; Grupo Damm with 11.34 million hectoliters; Hijos de Rivera with 4.81 million hectoliters; Cervecera de Canarias with 1.07 million hectoliters and Grupo Ágora with 0.88 million hectoliters. Independent breweries that, for their part, barely produce 0.14 million hectoliters.
Like this, Spain has become the second largest brewer in Europe after Germany.. “We’re in a good period of consolidation. Before the pandemic, consumption was split between 70% in the hospitality industry and 30% in the home. Now it’s 60% in bars and 40% in homes,” says CEO Jacobo Olalla. From Cerveceros de España.
“Beer consumers are loyal to traditional Spanish brands, Even those acquired by foreign multinationals, as in the case of CruzcampoVictoria Labajo, professor of Marketing and Market Research at Universidad Pontificia Comillas-ICADE, explains that “90% of the beer consumed in the country is produced in Spain, which continues its production with national raw materials.”
growth strategies
In Spain, the big groups in the industry started their way with very local products, but gradually moved their fight for the customer to the entire national region. To this end, they implemented various growth strategies, from acquiring other brands to marketing and sponsoring sports or festivals. Estrella Galicia chose to increase advertising to promote her brand. The president of Hijos de Rivera admitted in an interview that they spend 12% of their budget on advertising, while the industry average is 10%. Estrella Damm acquired the Malaga brand Cervezas Victoria to enter areas outside the east, such as Malaga or Madrid. Even a humble group like Ágora, owner of Ámbar beers, aims to expand their presence in Madrid and Barcelona. Ten years ago, he embarked on an expansion plan to go outside of Aragon. “We are a reference in the Ebro Valley and also in Navarra, La Rioja or the Basque Country. We also have good numbers in Álava, Córdoba, Valencia and Castellón”says company sources.
“Regional brands, such as Victoria from Malaga or Turia from Valencia, which were historically products with more modest sales in highly localized areas of Spain, have spread to other regions thanks to large groups. Large companies acquire and market them at the national level, relying on different leverages through distribution, advertising or sponsorships.“, says Sebastián Rodríguez-Correa, Head of Customer Success at NielsenIQ consumer consulting company.
In fact, the Damm group has also sponsored with Cervezas Victoria. The brand is the official sponsor of the Spanish men’s and women’s football team since 2021.. This collaboration was recently renewed for the next four years.
Another similar situation is the Dutch group’s re-launch in 2019 with Heineken’s El Águila beer, which started to be produced in Madrid in 1900, and in 2022 its sales increased by 51% to reach 1. According to Kantar’s data, 6 million houses. “The Spanish market has historically been characterized by a strong regionalization of consumer preferences in all areas. However, there are more and more brands with a high level of choice in all regions. For example, El Águila is becoming a preferred and preferred brand in every region of Spain“, say sources from the Dutch brewery.
And the big brewers are already playing practically at the national level. “We no longer classify Mahou or Estrella Galicia as regional brands. Quite the contrary, They are already playing in the area, although they still have a strong foundation for their business.“, assures Rodríguez-Correa. 55% of the sales volume for Mahou is in the Community of Madrid, Estrella Galicia is concentrated in Galicia 25%, and the Alhambra brand (owned by Mahou) has up to 40% in Andalusia. “Consumption in Spain has been determined by regional preferences because of culture, identity and its own beer tradition, but in an inflationary context, the struggle between brands has led them to seek leverage to grow outside of their traditional region,” he says. Sebastián Rodríguez-Correa of NielsenIQ points to a long-term strategy, “The ‘nationalization’ of big brands is one of the plans conceived in the pre-pandemic period,” explains Rodríguez-Correa.
The struggle to attract customers is bloody and has caused brands to abandon their traditional markets. An excellent Madrid beer, Mahou has grown strong around it. It recently bought 51% of the MadCool festival held in Madrid. Its sales still represent 55% in the region, but 45% are already abroad. Born in Barcelona in 1876, Estrella Damm became stronger and diversified her strategy in the Mediterranean region. “Obviously consumption is not so local anymore”, company sources say refusing to offer sales by region or country. In this case, the company also chose the path of internationalization. According to these sources, 30% of the activity, which was only 1.5% in 2007, is international.
Estrella Galicia has based its growth on investments and advertising. In 2017, the company only billed $465 million. Its goal is to reach 1,000 million sales in 2024, accompanied by strong marketing campaigns. Advertisements accompanied this growth plan. The characters in the series were seen as follows: incoming, semolina anyone live without permission He happily drinks Estrella Galicia in episodes of the series. Recently, segment 0.0 sponsors MotoGP competition as well as numerous sports clubs in Galicia. According to companies in the sports marketing industry, the price a brand must pay to associate its name with a Grand Prix ranges from 800,000 euros to 1.5 million euros. The group quickly increased its investments in 2022 to 153.4 million euros and will complete its growth plan in 2024.. Rivera assures that then it would be time to start thinking about more inorganic growth.
A digital study by DataCentric company reveals an intriguing result about this brand. Through a sample of nearly 40,000 digital surveys, consumers were asked to indicate their favorite beer.. Most of those in Asturias, Cantabria, the Basque Country, Castilla y León, the Commonwealth of Valencia and the Balearic Islands cited the Galician brand as their favorites in 2023.
The Ágora group followed a similar strategy with the expansion plan to the rest of Spain conceived ten years ago. “But with a more modest investment effort than Estrella Galicia’s”, confirm company resources. “We launched our first national ad campaign six years ago and have been trying to make a name for ourselves with bold proposals ever since,” they explain.
The struggle for the consumer has forced brands to constantly innovate in recent years. «Not all varieties released work the same, and not all remain on the market. The work environment forces you to constantly change in order to adapt. It is no longer worth being the most valuable person in your area,” says Francisco J. Lorente, professor at ESIC business school. “The presence of regional brands in cultural and sporting events in the city strengthens the bond between the society and the brand”This concludes the expert.