Beer market of Russia 2016: PET goes to draftThe beer market of Russia was warmed up by the hot summer, but the preparation for large volume PET prohibition has already impacted it negatively. The year was successful for Efes, MBC and regional producers; Carlsberg’s positions were virtually stable but AB InBev and Heineken lost a part of market share having focused on the sales profitability. The dynamics of big brands was determined by how much the companies were willing to keep the prices down or by their promotional activity. In this context the economy segment of the beer market and sales of inexpensive draft beer were increasing. The premium segment started shrinking due to license brands migrating to the mainstream segment.
Beer market of Vietnam: “Young tiger”Vietnam is one of the few big beer markets that continue to grow steadily. The beer popularity results from its low price, street consumption culture, and social motives. The outlooks of beer market as well as the Vietnamese economy inspire optimism, though the country is heavily dependent on export of goods. The state regulation can be called liberal, but the key risk for brewers is harbored in intensive rising of excise. Within TOP-4 there are two leaders, Sabeco and Heineken that grow at the fastest rates. The first company effectively employs its capacities, the second one focuses on marketing technologies. Almost 80% of the market belongs to century-old brands, yet the middle class and the youth are shifting their interest toward international premium that is growing taking share from the mainstream.
Analysis of beer market in China (on Russian)
Beer market of Ukraine: big three losing weightIn 2016, fast increase of excises and resulting price spike stood in the way of the beer market stabilization. Most of competition (as well as mass sorts) moved to the economy segment of the market. The biggest losses were incurred by the leading three, especially Obolon, which again experienced pressure after reallocation of Efes market share. However, one should already speak of TOP-4. Group Oasis CIS (PPB) became a strong player and competitor to transnational companies. Besides the net sales of many regional medium breweries look rather good and 16-fold cost reduction wholesale trade license for craft brewers opens up a possibility of rapid growth in 2017.
UK: PBD is ‘good for all brewers’
Last year, a number of regional brewers, with Adnams leading the charge, have attacked PBD and even suggested that Chancellor George Osborne could top up his depleted coffers by getting the brewing minnows to pay higher rates of duty.
"There's been a change of Government," Grocock says. "PBD was a significant measure brought in by the last Labour Government. The Government is looking at the whole tax system and that gives the critics of PBD the chance to get a word in."
The new duty system was introduced in 2002 by Gordon Brown when he was Chancellor. It proved a vital shot in the arm for small brewers. Many were threatened with closure as they struggled to compete with big brewers who enjoy "economies of scale", such as high-tech brewing with less wastage, that allows them to produce beer more cheaply than the micros.
PBD has been tinkered with since 2002. Today, the measure has a ceiling of 60,000 hectolitres. If a brewer produces more than 60,000 hectos a year, he gets no duty relief.
At the other end of the scale, brewers who make no more than 5,000 hectos a year get 50% duty relief on each barrel produced.
But PBD has a taper. The closer a brewer gets to the 60,000 ceiling, the more duty he has to pay - but there are clear advantages if you stay beneath the ceiling.
Since the introduction of the scheme, craft brewing has flourished. There are now more than 700 breweries in Britain, twice as many as when the Campaign for Real Ale (CAMRA) was formed 40 years ago. The choice of beer has never been greater. Nevertheless, the critics of PBD are gaining in volume and putting pressure on the Government for change.
Grocock is saddened by the attacks because he feels it has fractured the unity of a brewing industry that needs to have all its wagons in the circle at a time of declining beer volumes, an alarming rate of pub closures and a hostile media that blames beer and pubs for social problems connected to alcohol abuse.
"SIBA feels the pain of pub problems," he says. "Our members produce 85% of their beer in draught form." He argues that PBD introduced a level playing field for smaller brewers. "Micros don't enjoy the same economies of scale as bigger brewers and there are other factors to take into account.
"The raw costs of producing beer have to be set against bigger brewers owning pubs - both tenanted and managed - along with wine and spirits sales. A micro will have only production costs.
"In Germany, the duty on beer is around ?10 a barrel, which means beer is cheap for consumers while wine and spirits are dear.
"In Britain, beer is competing with all other types of alcohol, on top of which cider has a lower rate of duty than beer."
He's keen to hold out an olive branch to his critics. "The solution to the problem is not to attack PBD or call for its abolition but for all brewers to campaign for a reduction in the overall duty rate. SIBA believes duty is too high for all brewers. There should a reduction in VAT on beer as well - beer and pubs are part of the hospitality industry and should get more Government support.
"France has reduced VAT on beer and, if the French can do it, it must be a viable proposition.
"PBD has to be seen as an investment in an industry, not a tax give-away. Craft brewing ticks all the ethical boxes - it provides local employment, uses local ingredients and has a low-carbon footprint.
"And the growth of craft brewing has encouraged diversity, experimentation and innovation." With a wry smile, he points out that his biggest critic, Adnams, has widened its range of beers considerably and has even installed a small distillery.
"The success of the micros has revolutionised brewing. Brewers are no longer stuck in the groove of just making premium bitter."
He dismisses the argument - put forward in the MA in December by Paul Wells and Nigel McNally of Wells & Young's - that there are too many beers on the pub bar and this will lead to a fall in quality.
"I'm tired of hearing that. SIBA is committed to quality. We have a brewing support line and a technical services department to back up our members. And we're nudging our members to take full responsibility for dispense equipment in the pubs they supply."
Grocock is happy to talk to his critics but he won't budge on PBD.
"We should celebrate the diversity that it has introduced.
"Let's get rid of big-brand chauvinism and recognise that drinkers are promiscuous and are looking for something different on the bar. PBD has transformed the beer market - and that's good for all brewers."
26 Jan. 2011