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.
Carlsberg Operating Profit Jumps 38%
Earnings before interest, taxes and some one-time items rose to 1 billion kroner ($194 million), exceeding the 993 million-kroner average estimate of 16 analysts compiled by Bloomberg. The operating margin widened by 1.4 percentage points to 8 percent, the Copenhagen-based company said today.
Carlsberg shares rose the most in four months. The brewer gets about 45 percent of profit from eastern Europe, where first-quarter volume increased 28 percent compared with a period of last year when Russian sales were depressed after the government tripled alcohol taxes.
“This is a good start to the year,” Andy Smith, an analyst at MF Global in London, said in a note to clients. The Russian recovery “is gathering pace.”
Carlsberg shares gained as much as 24.5 kroner, or 4.1 percent, to 617 kroner, the steepest intraday gain since Jan. 18. They were up 21 kroner, or 3.5 percent, at 613.5 kroner as of 11:07 a.m. in Copenhagen trading.
The brewer reiterated its February forecast of “high single-digit” percentage growth in 2011 operating profit and adjusted net income growth of more than 20 percent.
“We are particularly pleased that the important Russian market has returned to growth,” Chief Executive Officer Joergen Buhl Rasmussen said in the statement.
Raw Materials Costs
Margin growth was “light of consensus,” as higher input costs and advertising expenses weighed on results, Dirk Van Vlaanderen, an analyst at Jefferies International Ltd. in London, wrote in a note today.
Raw materials costs rose in eastern Europe after record droughts led to poor grain harvests last year, Carlsberg said.
Beer sales, excluding acquisitions, slid 2 percent in northern and western Europe in the quarter as “consumer dynamics remain challenging,” the company said.
Total organic volume rose 10 percent, inflated by a low comparative due to last year’s Russian tax increase. Excluding the effect of the destocking in the first quarter of 2010, volume grew 2 percent, according to Carlsberg estimates.
First-quarter net income totaled 173 million kroner, the company said. That missed the 280 million-kroner median estimate of 14 analysts surveyed by Bloomberg.
Net income “was negatively impacted by an increase in special items related to restructuring and in other net financial items due to currency movements,” MF’s Smith said.
11 May. 2011