1. The Economics of Chocolate Johan Swinnen and Mara Squicciarini Soon at Oxford Univ Press The Economics of Chocolate Outline 1. History 2. Consumption 3. Industrial organization 4. Governance 5. Regulation 6. New markets Oxford University Press

2. Some Things To Know About The Economics of Beer & Brewing Johan Swinnen LICOS Centre for Institutions and Economic Performance University of Leuven Chocoa Conference Amsterdam, March 2015

3. Global Supply Chains, Standards, and the Poor Johan Swinnen CABI Publications

4. Some Things To Know About The Economics of Beer & Brewing Johan Swinnen LICOS Centre for Institutions and Economic Performance University of Leuven Chocoa Conference Amsterdam, March 2015

5. Beer (like Chocolate) For much of history, beer was a healthy drink and a nutritious food. More recent: focus on negative health aspects of alcohol intake (alcoholism, drunk driving) and amount of calories (obesity)

6. Beer (like Chocolate) Historically, beer taxes were a major source of government revenue –14th-17th century: 50%-90% of towns’ income in Low Countries –18th century: 50% of UK government revenue (John Nye: British Navy & Empire was financed by beer taxes)

7. Beer (like Chocolate) Brewing and beer were transformed by “technological revolutions” And a CounterRevolution is brewing …

8. The Hop Revolution in the Middle Ages Use of hops : –Enhanced preservation –Bitter taste balanced sweetnes of barley malt Transformed the entire global beer economy

9. Science & Industrial Revolution in the19th Century Discovery of yeast (Louis Pasteur !) Steam engine Refrigerator (cooling) Glass bottles  Lager Beer (“PILS”)  Improved consistency & control (quality)  Mechanization & transportation  Production at industrial scale

10. Consolidation in 20th Century Number of Breweries in Belgium 1850 – 2000

11. The global beer market structure 2000

12. The global beer market structure 2005

13. The global beer market structure 2010

14. TV & Advertising Scale economies in commercial TV & advertising played crucial role in consolidation of beer industry

15. Major changes in global beer consumption patterns (like in chocolate)

16. Share of beer in alcohol consumption (%) 1961 WHO IS WHO ? Belgium UK Spain A QUIZ !

17. Share of beer in alcohol consumption (%) 1961 Spain

18. Share of beer in alcohol consumption (%) 1961 Belgium Spain

19. Share of beer in alcohol consumption (%) 1961 UK Belgium Spain

20. Share of beer in alcohol consumption (%) 2011 WHO IS WHO ?

21. Share of beer in alcohol consumption (%) 2011 UK

22. Share of beer in alcohol consumption (%) 2011 Belgium UK

23. Share of beer in alcohol consumption (%) 2011 Spain Belgium UK

24. Belgium, Ireland, UK Spain, Italy, Argentina Global Convergence in Alcohol Consumption Patterns Share of beer in alcohol consumption (%) 1960-2010

25. Per Capita Beer Consumption Traditional Markets – Emerging Markets Belgium, Germany, USA, UK China, Russia, Brazil

26. Since 2003, China is the World’s Largest Beer Market China Russia US India

27. 5. The CounterRevolution of the 21st Century The Growth of Craft Breweries

28. The Growth of Craft Brewers Czech Republic Italy USA – 10 years aheadBelgium 1980 - 2010 1990

29. Rapidly Growing Beer Exports (billion liters & US$, 1961-2011) 1990

30. Exports of Belgian Beers : Relatively New & Driven by Crafts Export as % of Prod. 1960 : 0 % 1980 : 15% 2000 : 33% 2006 : 50 % 2012 : 62 % Outside EU: only since 2003 Total Production Exports Consumption 1990

31. Many similarities between Beer and Chocolate But: Supply Chain Issues are very different

32. For more info: www.beeronomics.org

33. Finally: How Beer Created Belgium (and The Netherlands)

34. 1648 BORDER The 1648 Treaty of Münster ended the Dutch Revolt against the Spanish Empire (The 80-year War) and determined today’s border between Belgium and the Netherlands 2014 BORDER

35. The Dutch won against the mighty Spanish Empire because of their superior capacity in financing the army SPANISH Army Exp DUTCH Army Exp

36. The Dutch won against the mighty Spanish Empire because of their superior capacity in financing the army SPANISH Army Exp DUTCH Army Exp Where did the money come from ?

37. The Dutch won against the mighty Spanish Empire because of their superior capacity in financing the army Spanish : SILVER TAX SPANISH Army Exp DUTCH Army Exp

38. The Dutch won against the mighty Spanish Empire because of their superior capacity in financing the army Spanish : SILVER TAX Dutch : BEER TAX SPANISH Army Exp DUTCH Army Exp

39. Without Beer (Taxes) … The Low Countries …

40. +

41. + = ?

42. For more info: www.beeronomics.org