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.
Analysis of beer market in China (on Russian)
Beer market of Ukraine: big three losing weightIn 2016, fast increase of excises and resulting price spike stood in the way of the beer market stabilization. Most of competition (as well as mass sorts) moved to the economy segment of the market. The biggest losses were incurred by the leading three, especially Obolon, which again experienced pressure after reallocation of Efes market share. However, one should already speak of TOP-4. Group Oasis CIS (PPB) became a strong player and competitor to transnational companies. Besides the net sales of many regional medium breweries look rather good and 16-fold cost reduction wholesale trade license for craft brewers opens up a possibility of rapid growth in 2017.
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