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.
Australia. Small brewers feel threat from Foster’s takeover bid
South African brewer SABMiller has offered $9.5 billion for Foster's Group, or $4.90 a share.
Foster's promptly rejected the offer as inadequate, and its share price soared 13.5 per cent, or $0.61, to $5.14 yesterday.
Foster's Group is the market leader in beer sales in Australia - Victoria Bitter is its most popular brand.
However, it has become a takeover target since it split from its troubled wine business last month amid mergers in the global brewing industry.
SABMiller chief executive Graham Mackay told a teleconference in London that he thought Foster's was a good buy.
"We believe that Foster's represents an attractive opportunity to acquire a leading brewer in a stable and profitable beer market," he said.
"However for a number of reasons the company has lost market share, has been underperforming for some years and continues to do so," he said.
He said SABMiller believed it could turn Foster's around because of its global reach.
SABMiller's beers include the premium brand, Peroni.
Analyst Greg Fraser from Fat Prophets thinks the bid is too low and SABMiller could raise the offer.
"It certainly looks as though SABMiller are testing the waters to see just what will be required to take Foster's off the hands of its current shareholders."
"It's probably right for Foster's board to initially reject the first offer at $4.90 per share - it does look a little opportunistic," he said.
But Peter Esho from stockbroker City Index thinks the SABMiller takeover bid is good value for Foster's shareholders because the company has been underperforming in a difficult retail market.
"If you're holding Foster's shares and you've been in them for awhile this news is a some type of a relief," he explained.
"Foster's is an icon that hasn't really gone anywhere."
He says the company's past decision to merge its beer and wine assets did not work.
"Foster's unfortunately have fallen behind of some of its brands," he added.
"So there really needs to be a commitment by somebody to come in and do all the hard work and make the numbers stack up."
If SABMiller does eventually win control of Foster's, Australia's two biggest brewers will be owned by foreign companies.
The number two beer maker, Lion Nathan which makes Tooheys and XXXX, is owned by Japanese brewer Kirin.
South Australia's Coopers Brewery would be the biggest Australian-owned brewer if a takeover of Foster's went ahead - it is still a family company.
Retail analyst Peter Ryan believes smaller brewers will also become takeover targets.
"There is a trend towards boutique brands of beer, those brands which are either organic or they have a quality element to the product," he said.
"Eventually if they get to a level where it makes sense for somebody to be able to see a return on their investment, equity will follow that and try and pump it up."
Scott Douglas runs Fusion Brewing, which makes boutique brands aimed at cafes and restaurants.
He thinks some small beer makers will go out of business if a global player takes over Foster's, because they will not be able to get shelf space in bottle shops or supermarkets.
"Just when the consumer's been educated and now starting to buy beers on taste and now get a new appreciation for beer, instead of just volume like the old days, the little guys will start going under again," he said.
However, Peter Esho thinks there will be more competition in the market not less if the takeover goes ahead.
"I think there will definitely more choice for consumers and perhaps international labels that are imported now might become a little bit cheaper if SABMiller takes over Foster's," he said.
Brewers say heavy discounting by supermarkets has harmed their sales.
Earlier in the year, Foster's withdrew some of its brands from Coles and Woolworths because the supermarket giants were selling beer below cost.
Scott Douglas thinks a takeover of Foster's will cause another price war and push out smaller brewers.
"Once they have forced out the smaller competition, then I think prices will go up," he said.
SABMiller and Coca-Cola Amatil co-own Pacific Beverages, which owns Bluetongue Brewery, and currently imports SABMiller brands such as Peroni and Pilsner Urquell.
SABMiller plans to buy out Coca-Cola Amatil's share of the business if it succeeds in its Foster's takeover.
22 Jun. 2011