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.
Foster’s to cast off wine; beer profit disappoints
The move could elicit interest from the likes of world No.2 brewer SABMiller (SAB.L) for Foster's $10 billion beer unit -- one of the last prizes in the globally consolidating beer market.
Foster's said the split, to be completed in May, would help each business pursue its own strategy after efforts to jointly market the two failed.
"As they do the demerger, it promotes the possibility of them becoming a target but the earnings will leave them looking somewhat vulnerable," said Angus Gluskie, portfolio manager at White Funds, which is a shareholder in the company.
"An acquirer has to be comfortable that there are some structural declines in that industry, primarily the traditional beer brands are really struggling to maintain their place in the market," he said.
The wine spin-off marks the end of a decade-long expansion, in which Foster's had spent around A$6 billion building its portfolio buying Southcorp and Beringer to create the world's second-largest wine company.
It then wrote down its value by half, or nearly A$3 billion, as the global wine glut, a tough market and surging Australian dollar slashed profits.
The beer and wine units are expected to attract interest from trade buyers and private equity firms after they are separately listed on the Australian Stock Exchange.
Foster's has already rejected one formal bid for the wine business, which owns vineyards from California's Napa Valley to the Hunter Valley near Sydney and labels including Beringer, Penfolds and Wolf Blass. That offer, from unnamed private equity bidders, was worth $2.5 billion.
BEER DEMAND DECLINES
Australia's beer market has declined in recent years, as consumers turn to wine and premixed drinks. Government statistics showed that Australians drank an average of 107 liters of beer in 2009, the lowest reading since 1947.
Foster's, which has been brewing its flagship brand since the 1880s, said it estimated the country's total beer market declined 7 percent in the six months to December, hit by one of the wettest and coolest summers in decades.
"Our financial results have not been as we would like them," Chief Executive Ian Johnston told an analyst briefing. But he said the beer unit, Carlton & United Breweries (CUB), had increased its Australian beer market share, as its volumes fell 5.8 percent, less than the sector's overall decline.
In the current half, beer volumes are expected to decline 3-4 percent. CUB has a market share of around 50 percent, ahead of main rival Lion Nathan (2503.T) with about 42 percent and various small craft beers.
Johnston, who will depart after the split following two years at the helm, said he never intended to put the company up for sale, but any offer would be considered "on its merits."
15 Feb. 2011