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.
China. NDRC Hauls in Beer Makers over Price Hikes
On March 31, the NDRC spoke to people from China Resources Snow Breweries Co. Ltd., Tsingtao Brewery Co. Ltd. (600600.SH), Beijing Yanjing Brewery Co. Ltd. (000729.SZ) and the China unit of Belgian Anheuser-Busch InBev NV (EBR:ABI).
Those four brewers have a combined 58% share of the country’s beer market.
In the face of rising raw material costs, local beer makers are planning to increase their product prices, and another round of price hikes is expected to take place from May, a person from a mid-sized domestic beer producer told the 21st Century Business Herald.
“Since February, the cost of beer production has risen by RMB 94 per ton, which explains the beer makers’ unanimous price hikes,” the person said.
Since January, CR Snow Breweries, China’s largest brewer by volume, has raised prices by more than 10% in Sichuan, Liaoning and Anhui provinces, where it enjoys a dominant position in the market.
Tsingtao Brewery also hiked prices of several products in the following months by an average of 10%, the company announced earlier.
The beer maker is considering another 5% hike for its core products this month, according to several industry analysts and market watchers.
“Costs of raw materials have been rising since the second half of last year, and then the cost of labor also went up by almost 30% since the beginning of this year,” said an industry insider.
The NDRC said it understood the position of beer makers given their rising costs, but said gains in liquor prices were inappropriate as liquor makers’ production costs had not risen by as much as those of brewers. The commission urged both beer and liquor makers to stabilize prices.
Prompted by rising inflation in China - the consumer price index (CPI) might have risen above 5% in March according to some analysts – government bodies are trying to take measures to contain or bring prices down. The central government is targeting a 4% increase in the CPI this year.
The NDRC has also talked to and investigated major consumer goods makers including Unilever Plc. (NYSE:UL) and the Procter & Gamble Co. (NYSE:PG).
Chinese media have been reporting that many manufacturers, P&G and Unilever included, are planning to increase the prices of cleaning and personal care items by 10% on average from April.
Questions have been raised by commentators as to whether some leading industry players are colluding to raise prices.
Consumer goods makers and food and drink enterprises have been invited by the NDRC to discuss putting off their price hikes.
Resigned to rising raw materials prices, brewers are figuring out new ways to offset higher costs.
“One way of countering the costs is to reduce beer capacity by as much as 100 milliliters for a 660-ml bottle,” said the head of a local beer company.
8 Apr. 2011