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.
The Brewing Organic Beer Market
After growing 7.2% in 2009, the craft brewing industry expanded by 11% in 2010, bringing its share of the U.S. beer market to 4.9%. However, given craft brewers’ generally higher price points than those of macro brewers like Anheuser-Busch Inbev and MillerCoors, this accounted for 7.6% of all sales in dollars. This reflects a growth in retail value of $600 million over the previous year, despite a 1% drop in volume of the entire industry. The number of breweries in the U.S. jumped concurrently to 1,759, the highest such total since the late 1800s. Of these, 1,716 were identified as craft brewers by the Brewers Association.
This dramatic increase in craft beer sales during the recession indicates that consumers’ tastes are evolving so much that they have become willing to accept the higher costs of a premium good like craft beer over cheaper, macro-brewed substitutes, even when their wallets are pinched, leading some analysts to project that craft beer’s share of the domestic market could even climb from 5% to 20% over the next ten years.
While organic beer still makes up only a fraction of the craft beer market, it is gaining ground very quickly. Between 2003 and 2009, U.S. organic beer sales spiked from $9 million to $41 million. However, with the correspondingly low supply of organic ingredients currently available on the market, organic brewers are subject to higher costs for their inputs than ordinary craft brewers. Suppliers are aware that organic brewers are willing to absorb these higher costs in order to make their beer organic, but these costs are subject to a low ceiling because organic brewers generally refuse to offset their variable costs with higher price points. Instead, they sell their products at prices comparable to the craft beer industry average. While these practices serve to minimize organic brewers’ bottom lines, it simultaneously limits suppliers’ ability to further manipulate prices.
In accordance with the industry’s reputation for innovation, many craft brewers have discovered unique ways to overcome these hurdles. For instance, Bison Brewing Company, a contract brewer located in Berkeley, California, sources all of its ingredients from the American northwest. As their business has grown, they have enacted vertical impacts on their supply chain by driving the conversion from conventional to organic farming practices in that region. Additionally, companies like Sierra Nevada have begun brewing small batches of organic beer using ingredients exclusively grown on their properties.
Because organic farmlands require 50% less energy to maintain than conventional farms, it is likely that if demand for organic beers continues to increase at a similar rate, or even one comparable to the craft beer industry as a whole, then organic brewers will soon benefit from increased profit margins as their average variable costs decline.
23 May. 2011