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.
SABMiller in $39.5m Indian tax fight
The company this month received a demand for payment of tax on the $120m deal. The move echoes the bitter $2.5bn dispute between India’s tax department and Vodafone, the UK telecoms company, over its 2007 purchase of Hong Kong-listed Hutchison’s assets in India.
The escalation of the SABMiller dispute comes as Vedanta Resources and Cairn Energy, two London-listed companies, are struggling to win regulatory approval for a $9.6bn purchase by Vedanta of oilfields in Rajasthan.
India is one of the few emerging markets seeking retrospective tax on deals done outside of the country by foreign companies. New Delhi’s vigorous pursuit of revenues on cross-border investments is viewed by some analysts as a deterrent to foreign investment in one of the world’s most promising emerging markets.
SABMiller’s acquisition of a brewery in Maharashtra and the Foster’s brand in India helped it become the second-largest brewer in the country, after the powerful United Breweries. Global brewers Anheuser-Busch InBev and Carlsberg have since followed the London-listed company into the Indian beer market.
The tax demand last week forced Foster’s to declare the potential liability to its shareholders, as SABMiller had agreed a tax indemnity with the Australian company at the time of the deal. The dispute has raged for two years and is before the Mumbai High Court. SABMiller has argued that tax is not liable on a transaction between two non-resident parties.
SABMiller said on Tuesday the company faced no liability from India’s tax authorities but that responsibility for any claims lay with Foster’s. “The Indians have sent us a final demand for payment. We’ve been very open about it,” he said.
SABMiller said: “The notice of demand issued to SABMiller by the Director of Income Tax in India for unpaid tax and interest … is subject to an indemnity granted by Foster’s to SABMiller in connection with the acquisition of Foster’s Indian operations in 2006.”
Foster’s said it was “confident of the positions that were taken in relation to Indian tax. Those positions will be defended vigorously in the Indian Courts.”
While SABMiller’s tax bill is small by comparison with the liability faced by Vodafone, a second example of a multinational being slapped with a tax demand a long time after the original transaction is likely to alarm investors, who fear one of the cases could set a precedent for the tax treatment of other deals.
"The tax revenue departments in India and China are on an overdrive when it comes to cross-border transactions. They are being viewed with a microscope," said Aseem Chawla, partner at legal firm Amarchand & Mangaldas & Suresh A Shroff.
“The Income Tax department is … especially aggressive in these tax deduction at source (TDS) cases,” said Sachit Jolly, a senior associate at law firm Vaish Associates Advocates.
“After Vodafone, they have been after many companies sending notices to almost all companies who transact with non-resident companies. These companies are all under scrutiny.”
SABMiller has struggled with what some of its executives describe as “enormous tax obstacles” in India. It also suffered a setback in the southern state of Andhra Pradesh last year, when regulatory measures imposed by the state government cut its market share to 30 per cent of the beer market from a previous 60 per cent.
13 Apr. 2011