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.
Russia. Ulyanovsk Calls for Medvedev to End Tax Breaks
His region is one of about a dozen in Russia that offers generous tax breaks to foreign companies, attracting the likes of British-based brewer SABMiller and U.S. chocolate maker Mars.
Another seven contracts worth more than 1 billion euros ($1.4 billion) are expected to be signed in the first half of this year.
But the 51-year-old former police official says he's ready to risk it at his next meeting with President Dmitry Medvedev.
Morozov said the tax breaks program should be replaced by a system used by some European countries where the government reimburses private investors with a portion of their startup costs. Putting his money where his mouth is, he intends to hand a proposal to that effect to Medvedev at the next State Council meeting of governors and other senior officials.
"We should give up the practice of providing tax breaks," Morozov said Friday at a conference on improving the country's investment climate in Ulyanovsk.
By doing so, he said, the government will "provide equal conditions for all investors."
Why Morozov would care about leveling the playing field for investors might puzzle some. But Sergei Vasin, executive director of the Ulyanovsk government agency responsible for working with investors, explained by telephone that the reimbursement program would promote investment better than tax breaks because it would reduce the time before a new project becomes profitable. Also, he said, Ulyanovsk essentially already has a reimbursement program in place since its tax-breaks scheme requires it to return taxes to investors.
Any company that invests at least 5 million euros doesn't have to pay regional taxes for eight years.
The tax-breaks program in the Ulyanovsk region, whose hilly east is divided from its largely flat west by the winding Volga River, helped bring in 6 billion rubles ($210 million) in direct foreign investment last year, according to regional government figures. Overall investment totaled 44.8 billion rubles.
Among those constructing production facilities in the region is Takata, a Japanese manufacturer of car parts and automobile safety systems that is scheduled to launch production next year. Five foreign and two Russian contracts worth more than 1 billion euros will be signed in the first half of this year, Vasin said. Morozov declined to identify the companies but told journalists after the conference that the contracts involved engineering equipment, construction, cars and the aircraft industry.
Ulyanovsk is home to the Aviastar-SP plane-building plant, which is to host a $250 million project to make aviation composites under an agreement reached by Morozov, the AeroComposite company and United Aircraft Corp. last month. The agreement is not among the seven pending contracts, Vasin said.
Morozov said the government should follow the example of Germany, where investors get 30 percent of their investment back in the first year after implementing a project.
In Russia, the money for reimbursements should come from a combination of the federal, regional and municipal budgets, Morozov said.
"The federal government has pointed to the importance of attracting investment and creating a favorable investment climate. But in fact the government has focused on macroeconomic issues rather than on practical ones, which are very important for any … investor," Morozov said.
The result, he said, is that investors only get "real financial support" in special economic zones that offer tax breaks, leaving other regions out in the cold.
He said his reimbursement proposal should be fixed in federal legislation.
His proposal found support from Sergei Belyakov, head of the Economic Development Ministry's investment policy department. But Belyakov noted that the tax-breaks program was introduced in the first place as a painless way for the government to save on spending.
"The idea is a good one, but it raises questions because its implementation would require a source of financing," he told The Moscow Times on the sidelines of the conference. "But we might be able to find this money somewhere."
Foreign companies would not be distressed about an end to tax breaks because they take into account other significant factors when deciding whether to invest in a region, said Pyotr Medvedev, head of the tax and legal division for Russia and other former Soviet republics at Ernst & Young.
One of the most crucial factors for investors is good infrastructure, including roads, especially for those looking to initiate production, he said by telephone.
One risk in ditching the tax breaks program is the possibility that the government will fail to set aside enough money to reimburse investors, he said.
Just as problematic, he said, would be the task of determining which investors are eligible for reimbursement. "Even if providing subsidies were fixed in legislation, determining who is eligible to get a subsidy would likely remain the result of the subjective decision of officials," he said.
A shift from tax breaks to government reimbursement might face resistance in regions like Kaluga, a magnet for foreign investors with $1.2 billion in investment last year and at least $1 billion more expected this year. Among the investors in the region are French cosmetics maker L'Oreal and carmakers Volkswagen, PSA Peugeot Citroen and Mitsubishi.
21 Mar. 2011