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.
China groups thirsty for Heineken asset
“There’s going to be consolidation, but on a smaller scale,” says Jeremy Cunnington, drinks analyst at Euromonitor, the data consultancy.
He points to this week’s acquisition of Wei Xue Beer by Anheuser-Busch InBev, the largest brewer.
“It is a case of as many feet on the ground as possible to capitalise on growth,” Mr Cunnington says.
Despite years of consolidation, China’s industry is fragmented compared with the rest of the world, which is dominated by groups such as ABI, SABMiller, Heineken and Carlsberg.
CR Snow Breweries, China’s biggest brewer, which is jointly owned by China Resources and UK-listed SABMiller, controls about a fifth of the market.
Together, the top four brewers control more than half the market.
The next five have a combined 16 per cent, but there remains a tail of up to 300 bit players, not all of them profitable.
Kingway, which Heineken and its partner Fraser and Neave of Singapore are quitting, is the eighth biggest with a 2 per cent share.
The Rmb1.08bn ($164m) sale of the 21 per cent stake is acknowledgement of Heineken “throwing in the towel” in China, says Ian Shackleton, a Nomura analyst.
The fact that the Dutch brewer failed to parlay its holding up to a controlling stake does not bode well for CR Snow, the putative buyer, he says.
However, it is far from a done deal.
GDH, Kingway’s government-controlling shareholder, has pre-emptive rights.
One theory is that it might exercise these and prevail over an auction, although other analysts remain sceptical and point out that GDH could have done this before CR Snow was brought in.
Any consolidation that occurs will have socialist characteristics.
As Humor Wang, general manager of CR Snow, puts it: “The Chinese consolidation methods are different from other countries. Brewery closures do not always follow acquisitions, even when they are badly located or inefficient.”
Mr Wang offers two reasons: the government’s eagerness to preserve local jobs – “That’s a benefit we can provide to the economy,” he says – and tax receipts for local governments.
His growth strategy is hinged on greenfields expansion.
This means that, unlike the legacy plants that come with acquisitions, the brewer can choose its own sites and build according to its own standards.
This strategy, Mr Wang says, does not go down well with all board members.
He says SABMiller “was very doubtful about the idea of greenfields in China”, in part due to fears over existing competitors operating in the chosen area.
He disputes this on the basis that the Chinese beer drinker is fickle and happy to switch from their traditional brew.
Even where there is overcapacity, a new participant can carve out market share, he says.
“In China everything is changing so rapidly. Everything. The history of drinking beer is no more than 30 years old.
“Minds are changing all the time, on everything. People may want a Japanese car today and an American one tomorrow.”
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20 Mar. 2011