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.
Heineken changes tack to protect market share
The group - which yesterday posted higher full-year profits on the back of cost savings and emerging market growth - saw sales volumes in western Europe slide 3.5 per cent during 2010.
The worst-hit markets included the UK, Spain, Italy, Ireland and the Netherlands, where beer consumption has fallen amid weak economic conditions.
Heineken is the largest seller of beer in Europe and the UK, thanks to the 2008 acquisition of the former Scottish & Newcastle operations in Edinburgh. Its UK market share is about 28 per cent - compared with number two Anheuser-Busch InBev's 15 per cent - while western Europe as a whole accounts for about half of all of Heineken's sales.
The group has traditionally focused on maintaining healthy margins, but signalled yesterday that it would sacrifice short-term profitability in favour of its market-leading position.
Analysts said the extent of Heineken's volume losses had been such that its European brewing base is at risk of becoming financially inefficient.
"In Europe, Heineken will shift its prime focus toward volume and value share growth, with increased investments in marketing and innovation in Heineken and other key brands, further supported by the international rollout of higher margin brands," the company said.
Despite difficulties in its mature main markets, the group as a whole posted a 41 per cent increase in profits to €1.4bn (?1.18bn) for 2010 on revenues slightly below expectations at €16.1bn. The results were boosted by last year's acquisition of Femsa Cerveza, the Latin American owner of brands such as Dos Equis and Tecate, as well as cost savings that beat expectations.
Heineken's cost-cutting programme resulted in savings of €280 million last year, about €80m more than forecast by analysts at Evolution Securities.
Much of this came in the UK, where Heineken closed breweries in Reading and Dunston near Newcastle, and sold the loss-making Waverley TBS wine business. It also undertook a major reorganisation of its Scottish & Newcastle Pub Company management arm, with about 1,300 properties now in its portfolio.
The resulting savings allowed Heineken UK to raise operating profits, despite a 4 per cent decline in last year's beer market. It also allowed the business to overcome lengthy price negotiations with Tesco and Morrisons, which hit off-trade volumes and market share in the first half.
Heineken, which brews Foster's, Kronenbourg and John Smith's in the UK, will introduce higher-margin brands into the international market to bolster its European performance.
17 Feb. 2011