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.
Trouble brewing in Foster’s split
The two-fifths increase since 2004 – from 27 per cent to around 38 per cent in 2010 – has come despite falling market share and growing price pressures and might help to explain why the brewing business features at the top of the list in speculation about takeover bids once the Foster's wine and beer businesses are split.
But it's worth pondering just how long Foster's can hold on to or even grow those margins when sales for many of its flagship brews like VB are falling and it has few, if any, growth levers outside the domestic beer market.
Its market share slipped 5 percentage points to 50 per cent between 2005-10 as CUB failed to respond quickly to the popularity of craft and premium brews.
Sales of VB are down more than 10 per cent and the Pure Blonde low carbohydrate brew fell 20 per cent in the year to February.
Some viewed Foster's halting of VB supplies to Coles last month to prevent its sale at what it believed would be below wholesale cost as proof that Foster's was in control.
Coles and Woolworths may command the majority of liquor sales in Australia but the real power, they argue, is still held by Foster's and Kirin's Lion Nathan (which has margins similar to Foster's), which share 90 per cent of beer sold in Australia. The cosy relationship has helped underpin price increases above the consumer price index for most of the past decade. But for how long can it last?
Foster's shareholders vote to split Foster's in two on Friday week (April 29). With a much talked about CUB takeover still just talk, the focus for investors is likely to shift to how well Pollaers has been able to execute his "Urgent Action Agenda" and resuscitate its long- term fortunes.
19 Apr. 2011