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.
Australia: Lion Nathan reports positve performance in 2010
The second half was characterised by strong competitive activity which failed to stimulate volume growth. Despite a strong start, at the end of the year the market was broadly flat in volume terms.
LNA’s ‘master’ brand portfolio continued to grow its share of portfolio mix and now represents 82% of total volume. XXXX Gold continued its impressive growth. The Hahn Super Dry trademark also had a particularly strong year with volume growth of 31% off a large base. Recent innovations XXXX Summer Bright Lager and Tooheys Extra Dry 5 Seeds are now firmly established in the marketplace with both brands exceeding launch expectations. The Boag’s portfolio continues to grow, benefiting from the reach of LNA’s route to market and a significant increase in marketing investment. James Boag’s Premium volumes grew by 21%, while Boag’s Draught grew 11%.
Lion Nathan New Zealand (LNNZ) performed well in challenging market conditions which were exacerbated further by poor weather and the Christchurch earthquake. Total revenue grew by 4.4% to NZ$612.7 million.
The core beer business grew revenue by around 1% against the prior year, realising value in a market in which volume declined overall. Steinlager Classic was a standout performer with double digit value growth, supported by a packaging refresh. The Wines, Spirits and RTD businesses benefitted from the acquisition of distribution rights for Bacardi brands and the successful launch of Mac’s Isaac’s Cider, which has driven strong cider category growth in the New Zealand market.
Conditions in the global wine industry remain very challenging with the economic slowdown combined with an oversupply of grapes putting downward pressure on pricing in domestic and international markets. The strong Australian dollar continued to undermine performance in key export markets. Despite the new acquisitions, wine remains a relatively small part of LNNF’s business and the company remains focussed on driving improved returns from its existing asset base as opposed to transformational growth.
After the conclusion of the financial year, the Company acquired wine brands from Pernod Ricard, including popular sparkling wine brand Lindauer.
LNNF CEO, Rob Murray said: “Our alcohol businesses delivered a solid performance against the backdrop of increasingly challenging market conditions. Consumers continue to trade up to more premium brands and this is driving revenue growth.”
While the NF business continues to make progress towards its integration goals, conditions in both the dairy and juice sectors remain very challenging for farmers and producers alike.
While revenue for the 9 months to September declined 5.8% to $2.32 billion, this was impacted by the divestment of the Freshco and Ski assets. Despite an increase in operating EBIT to $99.9 million, the business is still some way from achieving acceptable margins and faces some considerable headwinds. While they have moderated, input costs remain relatively high by historical standards and the business faces ongoing challenges to maintain adequate operating margins in a very competitive retail environment.
NF increased focus on brand investment delivered some significant successes during the year. Dare Iced Coffee was one of the fastest growing NARTD brands in the convenience market, delivering volume growth of 30%. Yoplait Form? launched its ‘Satisfy’ range which saw instant success and cemented the brand as the leading weight-management brand in yoghurts.
NF Managing Director Andrew Reeves said: “While the results are an improvement against the prior year, the business is still some distance from delivering an acceptable profit margin. National Foods intends to remain focussed, continue our integration progress and invest in our strategic assets to create a business fully focussed on the needs of customers and consumers.”
Earlier in the week, LNNF announced management changes relating to NF and LNNZ and Global Wine.
Peter Kean, currently Managing Director of LNNZ and Global Wine businesses has been appointed Managing Director NF, from 1 April 2011.
Peter Kean will take over from Andrew Reeves, who is leaving the business to take on the role of CEO for George Weston Foods, based in Sydney.
An announcement on Peter Kean’s successor will be made in due course.
Since the end of the year, market conditions for both all key business units have further eroded.
NF continues to experience significant margin pressures in both dairy and juice. Since the end of the year, the white milk market has seen deep discounting on private label and control brands which threatens to further dilute the profit pool available to all players in the supply chain.
Recent weather events have directly impacted key LNNF production facilities and prevented distribution to affected areas. Reflecting the iconic status of our business, particularly in Queensland, the Company has made an investment in aiding the recovery and providing support to its key stakeholders – suppliers, customers and consumers – through a range of programmes.
LN also recently conducted a recall on select batches of key brand Boag’s due to a packaging fault during the peak summer sales period. While significant effort was made to minimise impact on supply, the company is currently assessing the scale of the financial impact.
LNNF CEO Rob Murray said: “Rising interest rates and the ongoing economic uncertainty have had an impact across the FMCG and retail sectors in both Australia and New Zealand. Since the end of the year, this has been compounded by a series of weather events, particularly in Queensland which is a relative stronghold for our business.”
(Alignment of reporting year ends to September 30 2010 means the full year results represent a full twelve months for the Lion Nathan (LN) business unit* (October 2009 to September 2010) and nine months for the National Foods (NF) business unit (January to September 2010). NF’s October to December performance was disclosed on 10 February 2010.
LNNF continues to invest in its people and a focussed portfolio of core high potential brands to drive sustainable results in the long term. Business integration continues to progress to plan.
Like most operations in the retail and consumer goods sectors, LNNF’s key business units experienced increasingly tough market conditions in the second half of the financial year. A confluence of poor weather, tighter fiscal conditions due to rising interest rates and a lack of stimulus and also utility price rises combined to dampen consumer spending and reduce the rate of growth achieved in the second half after a relatively strong start to the year.)
13 Feb. 2011