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4-2017

Global hop market

A 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 Russia

Germany 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.

AB InBev: a developing taste

The king has returned. After 20 consecutive years of falling volumes, Budweiser finally became a growth story in 2010. The “king of beers”, though, needed its own version of a stimulus programme to arrest its decline, including relentless exposure at the world’s biggest sporting event, the football World Cup. The need to spend to sell is a worry for owners AB InBev. Less beer flowed from the Belgian brewer’s taps in every developed market last year. The company released annual results on Thursday that included earnings per share growth of 28 per cent, and operating margin expansion of 2 percentage points, but it should not be judged on past progress in the bottom line.
Since the merger which created the company in 2008, its results have been propped up by cutting the considerable fat in its US operation and selling non-core assets. But with that process almost complete, boosting the top line is now essential. This looks tough. In North America, where one-third of the company’s output is drunk, AB InBev volumes fell by 3 per cent last year – a faster decline than the market. High unemployment is a problem, but not a sufficient excuse; the average jobless rate in the key US demographic, males aged 20-35, rose only slightly last year.
Developed markets look ex-growth for AB InBev. Drinkers are shying away. Last year’s price increases helped but were merely a short-term fix, and acquisitions can be ruled out on antitrust grounds. For expansion, the company’s now depends almost totally on emerging markets, particularly Brazil and China, which currently consume about half the company’s production. If sales keep their current trajectory, the company should be considered an emerging market play – with an annuity-style developed markets business bolted on the side

8 Mar. 2011

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