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.
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