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.
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