The beer market dynamics in Russia is approaching zero, yet major brewers are divided into those who developed considerably in 2017 and those who considerably reduced their volumes. For instance, company Efes has managed to substantially extend their sales due to restrained pricing policy and activity in the modern trade. Heineken has also demonstrated an excellent performance promoted by significant increase of advertisement budgets launching a non-alcohol sort of the title brand and unusual activity in the economy market segment. Carlsberg and AB InBev have been focusing on margins and lost a market share of their inexpensive brands. Serious dependence on PET package and mass enthusiasm about Zhigulevskoe have negatively impacted the most of big regional brewers, that have been for the first time pressed by the leaders in the key sales channels, especially in Volga and Central regions. In the small business there has been a noticeable slowdown in appearing of new restaurant breweries, yet the number of craft breweries has been growing rapidly. In 2018, the beer market is likely to grow a little, while the share of AB InBev Efes may decrease due to the integration. ...
“Catalogue of Russian Beer Producers 2018” includes 1070 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft microbreweries.The catalogue includes 32 large breweries, 75 regional breweries, 693 industrial mini- and microbreweries as well as 270 restaurant breweries. ...
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.
India. Q&A: Kalyan Ganguly, MD, United Breweries
How is the beer industry doing in this time of hardening interest rates and high inflation?
Doing well and we are doing better than the industry, with improvement in our market share. The strong trend of last year continues. Competition has come in, the market has stabilised and consumers’ spending is witnessing a northward trend. We (in UBL) have not only added market share in strong beer but also seen around five per cent addition to our present market share in other Kingfisher products.
Is it volume growth or value growth in the third quarter?
The company is growing in both. We have increased our profitability and Ebitda.
What factors may spoil the party? The major concern of the company is the unabated inflation, which has its impact in raising the price of our key ingredients like sugar, malt and barley, among others. There will be pressure on the cost side due to such price rise. Inflation pressure will also be felt in our promotional activities. We are planning to increase our capacity to meet the increasing demand, which will also have similar impact. However, apart from the price rise in commodities, all other things are manageable.
How do you intend to mitigate this cost pressure?
As we have successfully tried in the past, we will try to improve our efficiency. We just cannot increase our prices to the end consumer, as the state governments have to take a call on that.
How much will capacity go up in the current year?
We are planning to put up new breweries in Nanjangud, Karnataka, along with one in Bihar. We will expand our existing capacity in Orissa, Kalyani, Aurangabad in Maharashtra (two units) and Hyderabad (three units) in the near future. With these planned capacities, our present capacity will go up to 16 million cases per month from 12.6 million cases in the current calendar (year).
How much will you invest in this expansion? How will you fund it?
Total investment will be around Rs 700 crore for these expansions. This funding will be done through a mix of debt and internal accruals. As our debt is at a comfortable level, we can leverage at any point of time.
How do you see the demand for beer going ahead in the wake of an adverse macroeconomic environment?
I don’t think there will be any dip in demand at this point. Our product is not that expensive and it caters to the young segment. With rising numbers of the educated young mass in India, along with sound GDP (growth) numbers, demand for our product should grow.
Your closest competitor lost market share recently. Is the market plateauing?
The industry is on a steady growth path. If any one loses share, it doesn’t mean the market is plateauing.
It been more than an year since you formed a strategic pact with Heineken to brew their product in India. When will it happen?
We expect to launch Heineken in the latter part of the year. Presently, we plan to brew this beer in our Mumbai brewery. However, we have to still import some of the raw material like barley for maintaining the quality. Our Mumbai brewery will be the focused one for brewing Heineken and we are moving our other beer brands to other breweries in Maharashtra as we prepare for Heineken. A pint of Heineken (bottled at origin) costs around Rs 160-175 in India.
18 Feb. 2011