Global hop marketA local alternative to mass beer suggested by independent brewers has been successful and is now altering the global market. Beer is becoming more diversified, so transnational companies have to accept the new game rules and to switch focus to young and fast growing markets. All these processes increased the demand for aroma and bitter hop as well as their acreage expansion on two continents. However now there appeared a downward trend of alcohol consumption in the world, so even special sorts can soon turn to be sufficient. In this connection the dynamic American hop market is already facing some problems. EU hop producers have become more cautious, they are not racing to exceed the demand and look forward with more confidence, judging by the contract terms.
Hop Market in RussiaGermany still dominates the Russian market, yet over the recent two years one has been able observe a continuous success of Czech hop suppliers. Their expansion and growing popularity of hops from the United States became the drivers of supplies growth in 2016 despite the preceding modest harvest crop in the EU, as well as the factor of relative stability in 2017. In this connection, in 2017, the ratio of the varieties continued to shift towards the aroma ones, and the supplies of Magnum hop and other alpha varieties were reduced. However, the import of bitter hop pellets is partially replaced by extracts, especially from the major beer manufacturers. Total volumes of alpha acid supplies, according to our estimation, decreased by approximately 5% and returned to the level of 2015. Barth Haas Group continues dominating the hop products market; HVG also increased its weight. At the same time, Morris Hanbury significantly reduced the supplies in 2017.
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.
MillerCoors Posts Strong Profit Growth in 2010
February 10, 2011 (London and Denver) -SABMiller plc (SAB.L) and Molson Coors Brewing Company (NYSE: TAP; TSX) reported that MillerCoors underlying net income increased at double-digit rates in the fourth quarter and full year ended December 31, 2010, despite one of the most challenging years on record for the U.S. beer industry.
MillerCoors fourth quarter underlying net income, excluding special items, increased 38.0 percent to $146 million compared with the prior year period, while full year underlying net income increased 21.9 percent to $1.087 billion behind positive pricing, favorable brand mix, and continued strong cost management. While industry volumes remained soft in the quarter, MillerCoors' Premium Light portfolio saw continued trend improvements.
"We continue to invest in innovation behind our premium light brands, drive growth in our craft and import portfolio and deliver synergy and cost savings as promised," said Leo Kiely, chief executive officer, MillerCoors. "Our consistent focus generated positive net revenue per barrel growth for the fourth quarter. We are building brand equity and improving our mix to meet the challenges ahead in 2011."
Key operating results for the fourth quarter are compared to the prior year comparable quarter and include MillerCoors operations in the U.S. and Puerto Rico.
FOURTH QUARTER AND FULL YEAR HIGHLIGHTS
(Unless otherwise indicated, all amounts are in U.S. dollars and calculated in accordance with U.S. GAAP, and all percentages are versus the prior-year comparable period.)
?Fourth quarter underlying net income, excluding special items, increased 38.0% to $146 million, while full-year underlying net income, excluding special items, grew 21.9% to $1.087 billion
?Fourth quarter total net sales increased 0.4% to $1.720 billion, while full-year total net sales were unchanged;
?Revenue per barrel growth was positive in the fourth quarter, as domestic net revenue per barrel (NRPB), excluding contract brewing and company-owned distributor sales, increased 1.7 percent, driven by pricing growth and favorable mix. For the full year, domestic NRPB increased 2.3 percent.
?Fourth quarter total cost of goods sold (COGS) per barrel increased 1.8%, while domestic COGS per barrel were flat. Full-year total COGS per barrel increased 2.1%.
?MillerCoors surpassed its three-year synergies goal six months ahead of schedule delivering $60 million of synergy savings in the fourth quarter, for a total of $505 million in cumulative synergy savings realized since July 1, 2008. Additional cost savings of $31 million were achieved in the fourth quarter, bringing total synergy and cost savings to $655 million since July 1, 2008.
For the quarter, MillerCoors domestic sales-to-retailers (STRs) declined 2.5 percent, about half the decline in the third quarter due to trend improvements in premium light sales. For the full year, STRs were down 3.2 percent.
Domestic sales-to-wholesalers (STWs) declined 2.2 percent in the quarter driven by STR declines. Full-year STWs were down 3.0 percent.
Fourth Quarter Brand STR Highlights
Premium Light STRs were down slightly in the fourth quarter, as Coors Light was up low-single digits due to strong distribution gains in the quarter; and Miller Lite trends continued to stabilize since the launch of the Miller Lite Vortex bottle and expanded distribution of the Miller Lite Aluminum Pint. MGD 64 declined at a double-digit rate.
MillerCoors Craft and Import portfolio managed by Tenth and Blake Beer Company grew double digits in the quarter, driven by the strong performance of Blue Moon, the biggest-selling craft beer brand in the country. The smaller Domestic Above-Premium portfolio continued to experience double-digit declines.
The Below Premium portfolio was down mid-single digits due to declines in Miller High Life and Milwaukee's Best. Keystone Light was down low-single digits.
Fourth Quarter Financial Highlights
MillerCoors total net sales increased 0.4 percent to $1.720 billion versus fourth quarter 2009. Full-year total net sales were $7.571 billion, virtually unchanged from prior year. Third party contract brewing volumes were down 3.7 percent for the quarter. Full-year contract brewing was down 0.7 percent.
Fourth quarter COGS per barrel increased 1.8 percent versus the prior year. The increase was primarily due to Coors Distributing Company's acquisition of Western Beverage in Denver. Domestic COGS per barrel were flat for the quarter despite higher fuel costs and unfavorable mix, which were offset by synergy and cost saving programs. Full-year COGS per barrel increased 2.1 percent.
Marketing, general and administrative costs decreased 5.4 percent to $472.5 million in the fourth quarter, primarily due to synergy savings and lower promotional and tactical spending.
Depreciation and amortization expenses for MillerCoors in the fourth quarter were $70.6 million and additions to tangible and intangible assets totaled $124.0 million.
During the fourth quarter, special items were $2.2 million primarily related to integration charges.
Integration, Synergies and Cost Savings
In the fourth quarter, synergy savings of $60 million were realized, driven by non-organizational synergies of $58 million. The non-organizational savings were primarily realized from media, regional tactical spending, inbound and outbound freight, packaging and brewing materials and point-of-sale materials.
To date, MillerCoors cumulative synergies have grown to $505 million, surpassing the original commitment to deliver $500 million by June 30, 2011.
In addition to synergies, an additional $31 million of cost savings were realized in the quarter driven by various cost savings initiatives led by the integrated supply chain, marketing and sales divisions. Cumulative cost savings to date total $150 million.
In total, MillerCoors has delivered $655 million in cumulative synergies and cost savings since July 1, 2008, and is on track to deliver $750 million of total synergies and cost savings by the end of 2012.
Overview of MillerCoors
MillerCoors brews, markets and sells the MillerCoors portfolio of brands in the U.S. and Puerto Rico. Built on a foundation of great beer brands and nearly 300 years of brewing heritage, MillerCoors continues the commitment of its founders to brew the highest quality beers. MillerCoors is the second-largest beer company in America, capturing nearly 30 percent of U.S. beer sales. Led by two of the best-selling beers in the industry, MillerCoors has a broad portfolio of highly complementary brands across every major industry segment. Miller Lite is the great-tasting beer that established the American light beer category in 1975, and Coors Light is the brand that introduced consumers to Rocky Mountain cold refreshment. MillerCoors brews premium beers Coors Banquet and Miller Genuine Draft, and economy brands Miller High Life and Keystone Light. The company also offers innovative products such as MGD 64, Miller Chill and Sparks. Through its new craft and import company, Tenth and Blake, imports Peroni Nastro Azzurro, Pilsner Urquell, Grolsch and Molson Canadian and features craft brews from the Jacob Leinenkugel Brewing Company, Blue Moon Brewing Company and the Blitz-Weinhard Brewing Company. MillerCoors operates eight major breweries in the U.S., as well as the Leinenkugel's craft brewery in Chippewa Falls, Wisconsin, and two microbreweries, the 10th Street Brewery in Milwaukee and the Blue Moon Brewing Company at Coors Field in Denver. MillerCoors vision is to create the best beer company in America by driving profitable industry growth. MillerCoors insists on building its brands the right way through brewing quality, responsible marketing and environmental and community impact. MillerCoors is a joint venture of SABMiller plc and Molson Coors Brewing Company.
Overview of SABMiller
SABMiller plc is one of the world's largest brewers with brewing interests and distribution agreements across six continents. The group's wide portfolio of brands includes premium international beers such as Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft and Grolsch, as well as leading local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. SABMiller plc is also one of the world's largest bottlers of Coca-Cola products. In the year ended March 31, 2010, the group reported $3,803 million adjusted pre-tax profit and group revenue of $26,350 million. SABMiller plc is listed on the London and Johannesburg stock exchanges. For more information on SABMiller plc, visit the company's website: www.sabmiller.com.
Overview of Molson Coors
Molson Coors Brewing Company is one of the world's largest brewers. It brews, markets and sells a portfolio of leading premium quality brands such as Coors Light, Molson Canadian, Molson Dry, Carling, Coors Banquet and Keystone Light in North America, Europe and Asia. For more information on Molson Coors Brewing Company, visit the company's web site, www.molsoncoors.com.
10 Feb. 2011