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.
AB InBev beer sales drop on Brazil rain, U.S. jobs
However, the maker of Budweiser, Stella Artois and Beck's said it expected volumes to improve from the second quarter and forecast continued benefits from price rises carried out in its main U.S. and Brazilian markets at the end of last year.
First-quarter overall group shipments fell 0.4 percent on a like-for-like basis, the first decline for the company since the third quarter of 2009 and against market expectations of a slight increase.
The Belgium-based brewer said on Wednesday a high jobless rate, notably among its core consumer group of young males, reduced volumes in the United States, while heavy rain kept growth to a minimum in Brazil. Beer consumption typically rises in warm and sunny weather.
Price hikes cut AB InBev's share of its two largest markets, but their net impact was positive, driving up revenue in both. Some U.S. consumers also shifted to premium beers.
Group revenues rose 5.6 percent to $9.0 billion and core profit (EBITDA) by 6.5 percent to $3.41 billion. Both were in line with average forecasts in a Reuters poll.
AB InBev shares dropped by as much as 3.8 percent to a three-week low of 42.2450 euros and they were among the weakest in the FTSEurofirst 300 index .FTEU3 of leading European stocks. At 1048 GMT, they were down 3.1 percent.
"The volumes were weak and the net profit was hit by certain financial items," said Bernstein Research analyst Trevor Stirling. "Some people are worried about the volumes, although I would expect volumes to pick up."
IMPROVEMENT FROM Q2
Chief Financial Officer Felipe Dutra said they would.
"We said in March that we were expecting soft points in the first quarter of the year with improvements starting from the second quarter going into the second half and that remains valid," he told a conference call.
"In terms of price, adjustments in the main markets took place at the end of last year so we already had that benefit in the first quarter and so that should continue into the second quarter and going forward as well."
AB InBev repeated that the cost of sales per hectoliter should increase by a low single-digit percentage this year as its hedging mitigated the impact of global commodity costs.
The futures price for malt barley is more than 50 percent higher than a year ago.
The company said revenue per hectoliter should grow by more than inflation. It also said sales and marketing investments would be a mid to high single-digit percentage higher in 2011 than in 2010.
"We continue to believe that a recovery in the U.S. economy is a question of when and not if. In the meantime, we will remain focused on building the health of our brands and driving forward with all our major initiatives," Dutra said.
U.S. employers stepped up hiring in March, when the jobless rate fell to a two-year low.
AB InBev's first quarter performance contrasts with that of world numbers two and three, SABMiller (SAB.L) and Heineken (HEIN.AS), both of which increased beer sales, although largely because of benefits in different regions.
MillerCoors , a U.S. joint venture of SABMiller and Molson Coors Brewing Co (TAP.N) and the second largest U.S. brewer, suffered a decline of volumes, albeit less than AB InBev and an improved trend compared with the previous five quarters.
Molson Coors reported lower-than-expected quarterly profit on Tuesday, hurt by a sales decline in Canada.
The world's fourth largest brewer Carlsberg (CARLb.CO), with a heavy presence in Russia, reports its first-quarter results next Wednesday.
4 May. 2011