Crisis Looms as Czech Republic’s Beer Industry Faces Decline in Sales and Closure of Small Pubs

The beer industry in the Czech Republic, renowned for its rich brewing traditions, is currently facing a period of significant challenge and uncertainty. Recent data from Dotykačka, a company that analyzes trends in the country’s businesses, has revealed a troubling decline in beer sales within the gastronomy sector. In 2019, beer sales accounted for one-fifth of the sector’s revenue, but this figure has plummeted to a mere 15% in the present year. Even in pubs, where beer consumption traditionally thrives, the percentage of beer sales has fallen from 55% to 44%. This worrisome trend can be attributed to escalating costs and evolving consumer behavior, which have collectively dampened the demand for beer. In contrast, the sales share of wine has remained stagnant at 3%.

Vladimír Sirotek, a representative from Dotykačka, highlighted the shifting revenue dynamics within the gastronomy sector, noting that the share of revenue from food has witnessed a notable increase. Over the past 12 months, sales of soups have surged by approximately 22%, while hamburgers have experienced a substantial uptick of 25%. Conversely, the price of fried cheese, a popular Czech dish, has risen by three percent year-on-year, primarily due to the previous years’ escalating prices.

Furthermore, the Czech Republic’s wine market is experiencing a noteworthy transformation, with the rising popularity of sparkling wines. Dotykačka’s data indicates that people are now consuming more sparkling wine than still wine, particularly in regional areas, which were historically more inclined toward still wine consumption. This trend can be attributed, in part, to the availability of more affordable alternatives in the sparkling wine category. In the first quarter of this year, sales of sparkling wines soared by 19% compared to the previous year, signaling a significant shift in consumer preferences.

Unfortunately, the struggling beer industry is not the only concern for the Czech gastronomy sector. Luboš Kastner, a representative from the Association of Small and Medium-Sized Enterprises, drew attention to the disappearing small pubs in rural areas. Dotykačka’s May data revealed a decline in gastronomy revenues for the first time this year. The company’s gastro index, which monitors the 50 best-selling items, indicated a nine percent increase in price levels compared to May of the previous year. Consequently, Czech gastronomy performance has experienced a tangible 12% decline, portending an imminent wave of bankruptcies, especially among rural pubs. Kastner criticized the government’s plan to increase VAT from 2024, as it is likely to result in higher beer prices and a subsequent decrease in consumer demand. He advocated for at least a one-year postponement of the VAT changes to mitigate the impending crisis.

The COVID-19 pandemic has further exacerbated the challenges faced by the Czech gastronomy sector. Forced closures of bars and restaurants during the pandemic caused a severe drop in sales and foot traffic, pushing many establishments to the brink of closure. Kastner emphasized that the pandemic has accelerated the demise of small rural pubs, aggravating an already critical situation.

The future of Czech gastronomy appears uncertain and potentially bleak. With declining beer sales, rising food prices, and the impending VAT increase, businesses in the sector are under immense pressure. Small pubs in rural areas are vanishing at an alarming rate, and a wave of bankruptcies looms large. The government’s support and intervention are crucial to ensuring the survival and revival of the Czech gastronomy sector. Immediate action is needed to address these challenges and provide necessary assistance to struggling businesses, safeguarding the country’s rich culinary heritage and cultural identity.

Article by Prague Forum

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