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.
Modelo, Molson eyeing joint Foster’s bid -source
* Banks including BoFA, Deutsche helping w/ financing
* Foster's ADRS up 5.5 pct; Molson shares down 3 pct (Adds company background, details on potential bidders, analyst comment, Molson Coors closing share price)
Molson Coors Brewing Co (TAP.N) and Mexico's Grupo Modelo SAB de CV (GMODELOC.MX) have been exploring a joint bid for Australia's Foster's Group Ltd (FGL.AX), a source familiar with the situation said on Thursday.
Banks including Bank of America Corp (BAC.N) and Deutsche Bank AG (DBKGn.DE) are helping the maker of Corona beer and the maker of Coors Light beer to come up with financing for a possible offer, said the source, who declined to be named because the talks are not public.
But a bid looks less likely than it did a few weeks ago because of concerns about the structure of the deal, according to Bloomberg, which first reported the news.
"A deal with this structure just doesn't feel right," said Morningstar analyst Philip Gorham. "I can see why Molson Coors is interested, but I don't believe the structure of the deal as it's been rumored really works."
Foster's, Australia's top beer maker with brands including VB and Cascade, has a market capitalization of A$8.31 billion ($8.81 billion), according to Thomson Reuters data. Gorham said he could see a deal being worth about $9 billion, which he guessed would be too much for Molson to swallow alone.
In late 2008, Molson emerged as a holder of a 5 percent stake in Foster's, leading to speculation that it could be a likely suitor once the company spun off its troubled wine unit. Molson has since unwound the position at a profit.
Foster's spun off the wine business, now called Treasury Wine Estates Ltd (TWE.AX), last month.
After the split, the market valued Foster's and Treasury more than they had Foster's before the separation, suggesting that a takeover premium was being baked in to the shares.
Furthermore, analysts have warned that the soaring Aussie dollar could scare off potential bidders, whom they said could include Japan's Asahi Breweries Ltd (2502.T), Coca-Cola Amatil Ltd (CCL.AX) and SABMiller PLC (SAB.L). [ID:nL3E7GA01G]
Foster's, Modelo, Molson, SAB, AB InBev and Deutsche declined to comment. Coke Amatil, Asahi, and Bank of America were not immediately available.
For Molson Coors, which has a joint venture in the United States with SABMiller, teaming up with Modelo would "make life complicated," said Morningstar's Gorham, since the Mexican brewer is half-owned by Anheuser-Busch InBev SA. (ABI.BR)
"Molson would be torn between two large, influential players," he said. Still, he said the timing made sense for Molson, as it is nearly done wringing out savings from the MillerCoors venture, and Foster's dominance in Australia fits with Molson's business, which is concentrated in the United States, Canada and Britain.
Even though Modelo does not have experience with overseas acquisitions, it has many international partnerships through which it sells its Corona and Negra Modelo beers around the world. It works with Molson in Canada and Foster's in Australia.
Molson, which has been under pressure by Wall Street to spend some of its cash pile, also lacks a strong track record of international deal-making.
"Because of the nature of consolidation, you've got people that get into bed with each other whom you might not expect," said Tom Pirko, founder of consulting firm Bevmark LLC.
Pirko said it would be interesting to see if AB InBev moves to block any such deal by Modelo, since it is widely believed throughout the industry that AB InBev would like to buy Modelo outright, and its buying a stake in Foster's would make it more expensive.
"It looks like you block it so you can get Modelo," said Pirko. "But in point of fact, if you want to continue to be the biggest brewer in the world, maybe the logical step is to allow Modelo to go forward and then swallow Modelo and Foster's."
Foster's shares closed on Thursday at A$4.28 in Australia. Its American Depositary Receipts were up 5.5 percent at $4.80 on the Pink Sheets. Molson shares fell 3.1 percent to close at $44.36 on the New York Stock Exchange.
3 Jun. 2011