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Global hop market

A 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 Russia

Germany 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.

SABMiller Chief Mackay Foresees More Consolidation in Global Beer Industry

SABMiller Plc (SAB)’s Chief Executive Officer Graham Mackay predicts more consolidation in the global beer industry even as companies find it more difficult to extract value from purchases.
“There are bolt-on acquisitions to be done around the world, and there are major deals,” the head of the world’s second-largest brewer by volume said yesterday at the Marketing Society’s annual lecture in London. Mackay doesn’t foresee a “steady march of consolidation,” he said, but expects acquisitions to continue as global brewers with the ability to buy assets look to expand.
“It’s harder to make the numbers work” to drive value from acquisitions, he said. Many brewing assets are owned by families seeking high prices from any disposals, Mackay said. He declined to comment on any potential purchases that SABMiller may make, including Foster’s Group Ltd. (FGL)’s beer unit.
Global brewery deals have totalled $141.9 billion in the last five years, according to Bloomberg data, including InBev NV’s $60.8 billion acquisition of Anheuser-Busch Cos. and the $18.7 billion joint bid by Heineken NV (HEIA) and Carlsberg A/S for Scottish & Newcastle Plc. Anheuser-Busch InBev NV (ABI), the world’s largest beermaker, Heineken, Carlsberg and SABMiller control almost half the beer sold globally, Mackay said.
London-based SABMiller, the maker of Peroni and South Africa’s Castle lager, looks at any possible transactions on a “global basis,” seeking to create more value than any sum paid, he said.
“Whatever you buy, you’ve got a job” to improve it, he said. The key point is to be sure to know how to “change the trajectory” of any business purchased. “If there’s value to be had, we’re up for it,” Mackay said.

Acquisition History
SABMiller, which in 1895 started selling beer to gold prospectors in South Africa, has grown partly by buying government-owned brewers, Mackay said. The company has also bought brands including Grolsch and Colombian brewer Bavaria.
SABMiller gets about 80 percent of sales and profits from so-called developing and emerging markets, according to analysts at Investec including Martin Deboo. That makes it the most exposed brewer to faster-growing markets, they said.
Five percent of beer sold globally is of brands consumed outside their country of origin, Mackay said last night. The beer market is “stubbornly diverse,” leading to a “high degree of localization,” he said. Marketing local brands to consumers is more effective for SABMiller than applying a global approach to selling beer, according to Mackay.

‘Emotional Concepts’
Beer brands are “emotional concepts far more than physical ones” and require “local interpretation” to drive sales growth, he said. This is complex, and makes it “hard to drive real scale benefit” across the group’s marketing operations, Mackay said.
“We recognize our approach is more costly” but “we believe we can’t be complacent,” he said.
“When it comes to brand marketing, each of the brewers have a different take on global versus local,” Mackay said. SABMiller has “embraced globalization, but with qualifications.”

29 Mar. 2011



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