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.
SABMiller suffers setback in China
The move sets the stage for a bigger tussle for Kingway Brewery Holdings, one of the few sizeable assets up for grabs in China’s fast-growing beer market. Alternatively, it could see provincial government controlling shareholders have a bigger say in determining how assets are parcelled out, analysts said.
SABMiller’s Chinese joint venture, CRE Snow, offered to pay Rmb1.1bn ($168m) for a 21.37 per cent stake in Kingway. The stake was put on the block by a Heineken joint venture in a move interpreted by analysts as the Dutch brewer giving up after failing to win control of the brewer.
But on Monday Kingway said that controlling shareholder GDH, a Guangdong provincial government holding company, had exercised its right to buy the 21.37 per cent stake, blocking CRE.
“CRE does not have a lot down in Guangdong province, so it would have been an entry point into a new area,” said Ian Shackleton, drinks analyst at Nomura. He added, however, that it was not “a huge miss”. SABMiller declined to comment.
Mr Shackleton reckoned GDH, which will now have a 74 per cent stake in Kingway, may sit on the stake. Others pointed to the “not low-ball price it is paying” – an implied $41 per hectolitre, compared with an estimated $25 per hectolitre for new build – and said this suggested it would aim to sell on the entire stake at a still higher price.
Chinese brewers, although typically bought simply for their capacity rather than brands, have attracted some strong multiples over the years. Last year Carlsberg paid an estimated $117 per hectolitre for a 5 per cent stake in Xinjiang Wusu.
News of the stymied deal in China came as activity is gearing up in Brazil, where family owners of Schincariol, the country’s privately run number two brewer, are mulling a sale.
Any sale would pit SABMiller against Heineken, which has operations in Brazil through Mexico’s Femsa.
The Brazilian market is dominated by Anheuser-Busch InBev, which has a market share in excess of 70 per cent. Jason DeRise, analyst at UBS, said an acquisition would be attractive for Heineken.
“It would help improve the Femsa deal dynamics because the Brazilian part of that deal is in a poor position and profitability is just above break-even,” he said. Bolting together Heineken’s sub-10 per cent market share with Schincariol’s 11-12 per cent “would fix the profitability.”
SABMiller, which would have less direct synergies, would find it harder to justify a big price tag, analysts said. However, Mr DeRise said any deal could prompt Petropolis, the number three brewer, to sell out too, giving a foreign brewer the opportunity to roll up a roughly 20 per cent stake in the fast-growing market.
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6 Apr. 2011