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.
Beer market of Vietnam: “Young tiger”Vietnam is one of the few big beer markets that continue to grow steadily. The beer popularity results from its low price, street consumption culture, and social motives. The outlooks of beer market as well as the Vietnamese economy inspire optimism, though the country is heavily dependent on export of goods. The state regulation can be called liberal, but the key risk for brewers is harbored in intensive rising of excise. Within TOP-4 there are two leaders, Sabeco and Heineken that grow at the fastest rates. The first company effectively employs its capacities, the second one focuses on marketing technologies. Almost 80% of the market belongs to century-old brands, yet the middle class and the youth are shifting their interest toward international premium that is growing taking share from the mainstream.
Analysis of beer market in China (on Russian)
Beer market of Ukraine: big three losing weightIn 2016, fast increase of excises and resulting price spike stood in the way of the beer market stabilization. Most of competition (as well as mass sorts) moved to the economy segment of the market. The biggest losses were incurred by the leading three, especially Obolon, which again experienced pressure after reallocation of Efes market share. However, one should already speak of TOP-4. Group Oasis CIS (PPB) became a strong player and competitor to transnational companies. Besides the net sales of many regional medium breweries look rather good and 16-fold cost reduction wholesale trade license for craft brewers opens up a possibility of rapid growth in 2017.
Why do craft breweries sell up?
While the sale of the brewery comes as a surprise, it's not surprising that the owners should want to sell. It's a pattern we've seen before here in Canada with our own regional microbreweries. There's a set of criteria under which it makes sense to sell the brewery, and these same factors seem to crop up repeatedly.
One reason why people become dedicated to craft breweries is the face that's associated with the beer. You might never meet the CEO of Anheuser-Busch, but sometimes you'll see the owner of a craft brewery making deliveries and have a chance to chat with him. So it's understandable that beer drinkers tend to feel betrayed when the owner eventually decides to sell their brand; it feels personal.
The tipping point for selling smaller breweries appears to be the amount of time invested, with the average coming in at around 20 years. Unibroue, for instance, sold to Sleeman after 14 years in business and is now owned by Sapporo. Creemore was independent for 18 years before being purchased by Molson in 2005. Granville Island Brewing in BC is an outlier, having made it 25 years before being acquired by Creemore (well, Molson, to be honest).
There's not really any point in accusing the people who owned the breweries of selling out. Brewing is hard work, and after about twenty years of it, I'm willing to bet just about anyone would be looking for a change of pace. I imagine an owner gets to a point where further expansion is almost impossible without a large influx of cash, and increases in production and distribution become logistical nightmares.
There are only so many places to sell a brewery. You're not going to get 40 million bucks for it on Craigslist. So while selling the brand to a larger brewery is probably the right decision, what that brewery will do with it is anybody's guess.
A positive example is touted by a company like Unibroue, where the products don't seem to have suffered any decrease in quality, and the distribution has increased to the point that you can find bottles of Maudite in Texas.
The purchase can, however, backfire in the short term. Creemore's main selling point, for instance, is that it's brewed in Creemore, Ontario. They'd be unable to move production without a significant hit in sales, and plans to increase the size of the brewery have resulted in a huge amount of resistance in the town of Creemore itself. While the quality of the beers hasn't seemed to decrease, the intention was clearly to increase production and distribution after the purchase by Molson, and that plan has been stymied by the physical situation of the brewery; a situation on which the brand depends.
It remains to be seen what will happen with Goose Island. If Anheuser-Busch is able to simply facilitate increased production and distribution without changing the formula that has made Goose Island rise to prominence, it might work out in their favour. The question is whether a company that is used to promoting monolithic brands like Budweiser will be able to wrap their heads around a brewery that produces a wide variety of somewhat esoteric offerings. I suspect that they will not be able to, as the change in marketing strategy required to promote over a dozen brands from the same brewery is so far outside their wheelhouse. But there are two options here:
Best Case Scenario: We get some Bourbon County Stout in Canada.
Worst Case Scenario: Super Bowl halftime show sponsored by 312 Urban Wheat.
4 Apr. 2011