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.
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.
Heineken Outbids Breweries for Bedele with $85.2m
Heineken’s offer of 85.2 million dollars for the acquisition of Bedele Brewery exceeded those of three other breweries, while it was the only bidder for Harar Brewery.
The technical proposals and financial offers of bidders for the acquisition of these breweries along with six other state owned companies offered for sale in the same tender are being evaluated by the board of the Privatisation and Public Enterprises Supervising Agency (PPESA).
The bids for the tender, which was floated on January 26, 2011, was opened on March 19.
Bedele Brewery, located 500km west of the capital, in Oromia Regional State, was first opened in 1993. With an annual production capacity of 75 million bottles, it exports beer with a 4.2pc alcohol content to the United States (US).
Aside from the offer from Heineken, Bedele received offers from Carlsberg Brewery (68 million dollars), BGI Ethiopia (64 million dollars), and South West – SABMiller (70 million dollars).
Harar Brewery, located in Harar 526km east of Addis Abeba, was established in 1993. Its annual production capacity of 67 million bottles makes it the second largest producer of beer in Ethiopia, after Bedele. Heineken offered 78.1 million dollars for its acquisition.
The Amstel-Heineken brand is one of the largest in the world. It brews and sells more than 200 international, regional, local, and specialty beers and ciders. This includes Primus, Birra Moretti, Sasres, Cruzcamp, Foster’s, Strongbow, Bulmer, Newcastle Brown Ale, Zywiec, Ochota, Kingfisher, Tiger, Dos Equis, Star, Tecate, and Sol.
Heineken NV was formed in 1952 and bears the founder’s family name, Heineken. In 2010, the company achieved a net profit growth of 19.7pc, and it has 140 breweries in more than 70 countries.
The PPESA, which has received 1.5 billion Br from transferring 287 companies and 16 companies through lease and joint venture (JV) agreements, respectively, to the private sector during its 15-year existence, initially planned to sell the three state owned breweries, including Meta Abo Brewery, in the next three years, according to the agency’s five-year plan.
However, due to the high demand from the private sector, the agency pushed the sale forward. The results for the tender floated on the sale of Meta Abo are yet to be announced.
PPESA’s process to privatise the breweries is only part of a larger mass privatisation effort. In January, Awash Winery, Awasa and Tigray flour factories, Kokeb Flour & Pasta Factory, as well as Gibe I Agricultural Development Enterprise were put up for sale for the first time by the agency, which has facilitated the privatisation of 73 companies and their branches over the past five years.
Kokeb Flour & Pasta Factory received six offers. ATL Trading Plc offered 55.3 million Br, Muler Industrial Plc offered 43.2 million Br, Centre General Trading Plc offered 41 million Br, Tamira Plc offered 35.7 million Br, and Al-Buruj General Trading offered 35 million Br. Tekelye Yezengaw, an individual bidder, offered 37.4 million Br.
Tigray Flour Factory received an offer of 11.5 million Br from Green Coffee Plc, and one of 12.5 million Br from Muler Industrial. Awasa Flour Factory attracted one bidder, ATL Trading, which offered 49.2 million Br.
Tabor Ceramic Products was up for sale for the third time. It did not receive an offer when the tender for its acquisition was first floated. However, it was awarded to Amaga Plc for 60.2 million Br during the second time, but the bid winner failed to pay the required 35pc of the total offer as a down payment to the agency and it was not transferred.
In the latest tender, it failed to receive an offer, alongside Awash Winery and Gibe I Agricultural.
The sale of the companies requires simultaneous submission of the technical proposals and financial offers, which are evaluated by the PPESA board. Upon winning and paying the deposit, bid winners have five years to pay the outstanding amount.
However, one of the basic requirements of the bid is for the bidder to possess the financial capacity to administer and enhance the company’s potential.
For this reason, it is likely that all the highest bidders will be awarded the companies, a consultant, who had prepared the financial proposals for some of the bidders that participated in past tenders issued by the PPESA, told Fortune on condition of anonymity due to non-disclosure agreements with clients.
The bid winners are also required to retain the employees of the privatised companies. To date, a total of 32,500 employees have been transferred along with the former state owned enterprises.
5 Apr. 2011