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.
US. A Sign of the Times: St. Louis A-B Wholesaler Expands Into Craft Beer
But in recent months, something new has started popping up in corners of Lohr's warehouse: beer from local and out-of-state craft breweries. Lohr executives are banking that reaching into the lucrative craft beer market for the first time in the family-run company's 47-year history will reap rewards.
"We see craft beer as the future of how we want to grow this company," Lohr Vice President Kurt Leinauer said. "We're investing a significant amount of time, money and people into making sure we provide the same level of service and knowledge on the craft side that we always have with the rest of our brands."
Lohr's leap into the craft segment took off in October, when it signed local distribution deals with St. Louis-based Six Row Brewing Co. and Griesedieck Bros., followed by contracts with New York's Southern Tier Brewing Co. and Kansas' Tallgrass Brewing Co.
Around the same time, Lohr bought Maryland Heights-based Gateway Wine & Spirits. The move gave Lohr new territory in St. Louis and St. Charles counties and added liquors and wines to its portfolio, which at one time had been all beer.
Last month, Lohr picked up three new craft beer accounts: San Diego's Green Flash Brewing Co. and local brewpubs Morgan Street Brewery and Ferguson Brewing Co.
It also hired an employee, craft beer representative Cory King, to help lend credibility to its new push. King is leading all Lohr sales reps in becoming certified through the Cicerone program, a Chicago organization that tests beer knowledge.
"We all are learning as much as we can about craft beer, but we're not experts yet, so we needed a go-to guy who could guide us," Lohr principal Bob Gassoff said of King, who most recently worked as a manager as Soulard's International Tap House. "Cory has experience on the wholesale side, experience on the retail side, and he's a homebrewer. He knows beer."
Lohr's salespeople were part of the reason Mike Rami sought out Lohr when his Six Row Brewing Co. in midtown needed a Missouri distributor.
"The fact is, these A-B guys have the biggest and best sales force," said Rami, who uses another A-B distributor, Donnewald, in Illinois. "They've been selling beer for the longest, and they don't have too many craft accounts, which means they can really focus on the ones they do have."
Leinauer and Gassoff agreed, saying they don't want to take on so many craft accounts that Lohr loses the ability to effectively sell those products -- or A-B's. They said it was too early to tell whether their investments in craft would pay off, but they are confident they can tap into the growing segment's profits without disrupting their relationship with A-B.
Within the network of 600 or so U.S. independent wholesalers that do business with A-B, "hundreds" are mirroring Lohr's newfound interest in craft beer, according to Harry Schuhmacher, editor of Beer Business Daily.
"Within the industry we call it Anheuser-Busch's 'jailbreak,'" Schuhmacher said. "While in the past A-B distributors tended to be exclusive distributors of A-B's products, today they are heartily taking on competing brands, particularly from craft breweries. A-B distributors are going after independent craft brewers with gusto."
And "you can't blame them," Schuhmacher said.
Craft beer's high profit margins and proven popularity appear to make the extra expenses of storing, selling and delivering the products worthwhile to distributors.
"That's where the money and the growth is," Schuhmacher said.
Budweiser and its sibling brands remain Lohr's primary focus, despite the company's foray into craft. As the exclusive A-B distributor in St. Louis city, Lohr moves about 3 million cases of A-B beers each year, a far greater number than the amount of beer it sells for its handful of craft accounts.
Craft breweries -- defined by the Colorado-based Brewers Association as independently owned companies that produce fewer than 6 million barrels of beer a year -- make only 5 percent of the beer consumed in the United States.
But the industry has seen rapid sales growth in recent years despite a slight decline in overall U.S. beer consumption.
Asked whether the company felt abandoned by Lohr's moves toward craft beer, A-B's vice president for business and wholesaler development, Don Johnson, pointed out that his company had a stronghold on Lohr's sales.
"Nine out of every 10 beer cases sold through the nationwide Anheuser-Busch distribution network continue to be Anheuser-Busch products," Johnson said in a statement.
"We are focused on providing our wholesalers with a broad portfolio of products to compete."
16 Mar. 2011