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.
India. UBL undisputed leader in beer market
“Their (UBL’s) market share is expanding every quarter and one reason is that the main competition, SABMiller, is having issues,” says Abneesh Roy, vice-president (research), Edelweiss Securities, adding that the market is a one-horse race now.
Varun Lohchab, director (institutional equities), Religare Capital Markets, agrees, pointing out that the Heineken launch would complete the company’s beer portfolio in all price segments.
Also, Heineken is expected to give global giants Anheuser-Busch InBev and Carlsberg — operating in a relatively premium market now, but one that is expected to grow rapidly because of rising incomes and brand consciousness — a run for their money.
The edge for Heineken would be UBL’s country-wide manufacturing and distribution network in what has traditionally been a difficult market for newcomers, as beer is taxed on a par with spirits, which makes it expensive, besides varying regulations from state to state and a restriction on advertising.
“The point is we understand this market,” says Shekhar Ramamurthy, UBL deputy president, adding, “We see Heineken as being even more premium than Carlsberg and Kingfisher Ultra in terms of prices for the consumer. We are confident it will create a very positive impact.”
This consolidation of strength seems like a good strategy, especially if one considers that the London-headquartered SABMiller has been challenging UBL’s Kingfisher brand over the past decade in the over 5% alcohol content segment by acquiring strong local brands such as Haywards and Knockout, besides the mild beer Royal Challenge from Shaw Wallace. For the record, India’s beer consumption is still minuscule by global standards —per capita consumption is about 1 litre compared to the global average of over 24 litres. More than three-fourths of India’s beer sales are of the strong variety with over 5% alcohol content, with only upmarket towns and cities preferring light beers.
SABMiller, meanwhile, is re-aligning its strategy to soften the blow in Andhra Pradesh, where it is challenging the government-run beverages corporation’s new procurement policy, by focusing on more profitable segments and markets where pricing is not government controlled. SABMiller dominated the Andhra market, but the state’s beverage corporation now places orders based on national market share against share in the state previously.
“At the end of the day, we are there to make profit, not volumes,” says Sundeep Kumar, director (corporate affairs and communications), SABMiller, adding that the company has been adopting that strategy since it entered India in 2000. “We discontinued eight brands for the same reasons because they were not profitable. Our volumes came down, but our profitability went up,” he says, adding that the company’s share is growing in more profitable states such as Maharashtra and Karnataka
However, newer entrants such as the iconic Budweiser beer, which sold about 1.7 million cases in 2010, are also upbeat about making inroads into smaller towns in India. “Currently I think everybody who has a global footprint knows India is the market of the future, no doubt about that,says an official of InBev India International, not wishing to be named. The company, a JV between Anheuser-Busch InBev and the RK Jaipuria Group, handles the marketing of Budweiser, which is currently being brewed at a Hyderabad plant.But for now, UBL is going strong.
31 Mar. 2011