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.
US. Drinks Americas receives Letter of Intent from Worldwide Beverage, expanding brands and production resources
In addition to the shares of common stock for the distribution rights to each of the new products, Worldwide will make a capital contribution in the Company of no less than $1.5 million, through cash provided by the sale of Worldwide products by Drinks or otherwise. Upon the consummation of the transaction, Worldwide will have acquired an interest not to exceed 49% of the Company.
Federico Cabo, principal operator of Mexico’s third largest brewery, Cervecer?a Mexicana, S. de R.L. de C.V., and seventh largest tequila distillery, Fabrica de Tequilas Finos, S.A. de C.V., will join the board of directors of the Company. The members of the Company’s current board will also continue as members of the board of the Company. The Company’s current management team will enter into employment agreements with the Company for terms of up to five years but no less than three years.
In anticipation of the transaction, Worldwide has commenced the assignment of licensing and distribution rights of 39 SKUs of products owned or licensed by Worldwide. Worldwide will provide the production resources for each of the products and will extend 120 days credit on the products.
The final terms and conditions of the transaction are being negotiated and will be reflected in a definitive agreement. No assurances can be provided that a definitive agreement will be executed. Execution of a definitive agreement is subject to, among other things, the satisfactory completion by the Company of its due diligence, standard regulatory approvals and other conditions, and approval by both companies’ management and board of directors. The transaction is expected to close no sooner than June 30th and no later than July 15th, 2011.
Federico Cabo stated, ”The combination of the resources of both companies, our brands and our production resources should allow for the rapid growth of the Company. We are very excited about the transaction and the forward plan for the companies.”
J. Patrick Kenny, CEO of Drinks stated, ”It goes without saying that Federico Cabo’s history of success in the beverage industry is a tremendous addition to our Company. The products and the resources in the combined companies will provide a significant platform and will position our Company for growth and expansion. The key hurdle for Drinks has been access to production capital in today’s debt markets. This transaction provides Drinks with production and inventory resources for both our existing and newly added products and strengthens the Company exponentially.”
Worldwide currently markets products produced by Fabrica de Tequilas Finos, S.A. de C.V., the seventh largest independent tequila distillery in the world, including Kah Tequila, Agave 99 Tequila and Ed Hardy Tequila, and the beer products produced by Cervecer?a Mexicana, S. de R.L. de C.V., the third largest brewery in Mexico, including Mexicali Beer, Rio Bravo Beer, Chili Beer and Red Pig Ale. Drinks has recently launched Rheingold Beer and also markets Old Whiskey River Bourbon, Aguila Tequila, Damiana Mexican Liqueur and is an owner of Olifant Vodka. The combined brands are expected to be distributed and marketed in all 50 states with Drinks acting as either importer and distributor or primary sales agent for the combined brands.
In furtherance of the Company’s pursuit of the transaction, on May 17, 2011, the Company entered into a letter agreement (the “Agreement”) with a board member (the “Lender”). Pursuant to the Agreement, the Lender agreed to make or arrange a loan in the aggregate amount of $250,000 (the “Loan”) to the Company, with disbursements of $100,000 on May 20, 2011, $50,000 on June 15, 2011, and $100,000 on July 5, 2011. The Loan will mature on November 20, 2011 and will bear interest at 8% annually, payable monthly in arrears commencing on July 1, 2011. The Company intends to utilize these funds to accelerate its growing Rheingold business and the costs involved in the Drinks-Worldwide transaction.
16 Jun. 2011