10+1 trends of Russian beer market 2015-2017Despite of the moderately negative prognoses for 2017, the beer market can be stabilized soon. Yet the years of the negative dynamics have resulted in marketing being limited just to “optimization” and the art of balancing between price and volumes. Bigger supermarkets share means stronger trade marketing. These processes are connected to the majority of the described trends. At the same time, the federal brands inflation leads to searching for new tastes, sales channels and contact formats that expand the product range and diversify the beer market, but do not imply a substantial volume increase. Let us enumerate and further discuss the ten trends of the beer market we can see in 2015-2017 as well as the major event of 2017.
Beer market of Ukraine 2017In the first half of 2017, the Ukrainian beer market goes on decreasing slowly. Yet, the companies manage to compensate their lost volumes by raising prices and improving the sales structures. This results in the mid price market segment reduction while the sales of premium brands are rising. These processes are connected to position strengthening of companies Carlsberg Group and Oasis and the market share reduction of Obolon. Most of the novelties by the market leaders belong to craft or hard lemon categories.
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.
India. SABMiller loses fizz in market race
SABMiller said it would be consolidating volume sales in the more profitable Indian states like Maharashtra, Karnataka, Haryana and Rajasthan and is not interested in a bruising battle for market share with arch rival United Breweries (UB). The world's second largest beer maker, which acquired Shaw Wallace Breweries and Foster's India in two expensive deals, had raised visions of mounting a serious challenge to the leadership of flamboyant billionaire Vijay Mallya-led UB.
The industry estimates suggest that India's beer consumption reported over 20% rise to reach almost 170 million cases (of 7.8 litre each) in the first nine months of the fiscal. SABMiller's volume sales during the period were estimated at just under 40 million, while UB sold a little over 90 million cases. It pegged SABMiller share at around 23%, which evaporated further in the standalone October-December quarter. Sources said SABMiller's overall domestic share had fallen to 19% in October and November but recovered a bit to end at 20% in December. Meanwhile, UB, makers of Kingfisher beer, may well be on its way to report an all-time high market share of 55% in FY11.
A SABMiller spokesperson, who refused to discuss specific numbers, said the company was focused on generating return on its $1-billion plus investments in India.
"We have made considerable investment in India over the past decade and a fair return on this investment is paramount. Growth in profitable volume is therefore the goal. In India, the state environments vary considerably. Focused growth by state therefore is a more meaningful measure of success than national share," he added. A senior company executive said the brewer hopes to report operating profit this fiscal after its profitability was mauled in the past two years.
SABMiller said it was reporting double-digit growth in India and continued to believe in the country's growth potential. Industry observers said the MNC brewer was lagging the market growth as well as that of the main rival--both of which are topping 20% year-on-year. This, they added, has seen many of SABMiller's frontline brands except Knock Out Beer finding it tough to hold market shares in their respective segments.
A section of the analysts also noted that SABMiller's latest stance challenged an established principle in the Indian beer market-that buying market share (through aggressive discounting) was a way to later-day profitability. This is possibly a reason why new brand introductions like Indus Pride and Castle Beer did not gain much ground.
"We work on very different yardsticks of profitability (on every hectolitre) compared to our rivals. SABMiller has multiple markets around the world where it can deploy the capital unlike its rival here. And capital goes where there is profitable growth," a senior executive said on condition of anonymity.
Globally, brewers like AB InBev and SABMiller, the two big acquirers in an ever consolidating industry, have checked what some analysts called "growth binge" and have controlled spending.
SABMiller blamed regulatory changes in key markets like Andhra Pradesh and Tamil Nadu-where the MNC brewer lost heavily with rivals -for loss in volume and market share. But it also appears to have surrendered leadership in most markets except Chhattisgarh. It has swapped roles with UB in several states such as Maharashtra, UP and Orissa where it was much ahead of the rival only a couple of years ago. UB, in which Dutch brewing giant Heineken owns an equal 37.5% stake, is nearly two-and-half times bigger by volume and market share now. One SABMiller executive looked at the Indian spirits industry to draw comfort: French whiskey giant Pernod Ricard rakes in more profit than United Spirits, which is six times bigger by volume. But this comparison may be flawed as Pernod Ricard, makers of Blender's Pride and Royal Stag whiskies, has been steadily growing volume and taking share away from the leader while running a hugely profitable operation. The question remains whether the beer mug is half full or half empty for SABMiller.
7 Feb. 2011