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.
Beer market of Vietnam: “Young tiger”Vietnam is one of the few big beer markets that continue to grow steadily. The beer popularity results from its low price, street consumption culture, and social motives. The outlooks of beer market as well as the Vietnamese economy inspire optimism, though the country is heavily dependent on export of goods. The state regulation can be called liberal, but the key risk for brewers is harbored in intensive rising of excise. Within TOP-4 there are two leaders, Sabeco and Heineken that grow at the fastest rates. The first company effectively employs its capacities, the second one focuses on marketing technologies. Almost 80% of the market belongs to century-old brands, yet the middle class and the youth are shifting their interest toward international premium that is growing taking share from the mainstream.
EAC beer makers lose income to the black market
Spectre International, a spirits mixer, said the uneven tax structures among the East African Community (EAC) partners has spawned a thriving black market.
“Research has shown that high tax rates are a significant motivator for tax evasion and is the major cause of the proliferation of the black market in Kenya,” said Spectre Internationalsales and marketing director Ruth Adhiambo.
Spirits in Kenya attracts Sh280 per litre in excise duty compared to Sh80 per litre in Tanzania and Sh49 per litre in Uganda.
Declining tax compliance, she said, had seen revenue from excise duty fall to below Sh10 million per month because of cross-border smuggling induced by the disparities.
“Policy makers have refused to tackle this challenge and have instead resorted to raising taxes and costly administrative measures,” said Ms Adhiambo.
Smuggling of spirits through KRA manned ports and porous borders has denied alcoholic drinks manufacturers revenue with Ms Adhiambo saying the biggest losers have been distillers, Spectre International Ltd and Agro Chemical and Food Company (ACFC), which have recorded reduced sales.
The distillers say the reduced sales have been worsened by KRA’s requirement for registration of Kenyan firms which import spirits from Uganda, Tanzania, Rwanda and Burundi, a demand not made by competing exporters in Southern Africa and Asia.
“Uganda and Tanzania are recording significant rise in per capita consumption of spirits,” said Ms Adhiambo.
Producers of alcohol-based products had relocated to other East African countries forcing a shift towards imports of finished products and shrinking the market for local distillers from 100 firms in 2005 to less than 10 presently.
Ms Adhiambo said the introduction of Electronic Cargo Monitoring System (ECMS), flow metres, delayed deliveries and administrative fiat had made Kenyan spirits the most expensive in the region.
She said taxation on denatured spirits— meant for industrial use and essential purposes — should be lifted because it had reduced its consumption from an average of 60, 000 litres per month to less than 5, 000 litres a month.
Mr Caleb Oguya, marketing manager Agro Chemical and Food Company (ACFC) said that the taxation on denatured spirits has eroded sales margins to less than 25 per cent.
“Some of our customers have stopped purchasing from us and are instead importing finished products,” said Mr Oguya.
16 Mar. 2011