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.
SABMiller play for Foster’s expected to drag on for months
Foster's shares have jumped to trade 6 percent above SABMiller's offer, rejected on Tuesday, with investors betting that SABMiller may have to raise its original bid by at least 10 percent to seal the deal.
"SABMiller is the logical buyer," said John Grace, portfolio manager at Ausbil Dexia, which owns a 0.5 percent stake in Foster's, according to Thomson Reuters data.
"They've got intentions to grow their global market share and Foster's presents an attractive opportunity. They're trying to engage with the board to come to an agreement. So it's early days," he said.
Foster's is alluring for its 50 percent market share in Australia, where its Victoria Bitter, Pure Blonde and Cascade beers help it earn some of the best margins in the developed world.
Others own the Foster's brand offshore, including SABMiller, which owns the brand in India.
Brokers have speculated that SABMiller, which brews Peroni, Grolsch and Miller, would have to offer at least A$5.25 to draw Foster's into talk, and would have to pay at least A$5.40 to clinch the deal. Foster's shares last traded at A$5.19.
"They'll have to up the price a little bit," said a portfolio manager at a Sydney-based fund that owns Foster's shares, declining to speculate on what would be a fair price.
"The beer volume's been down. They're trying to turn it around. So you're buying at the bottom of the cycle. Why would you give it away?"
SABMiller is seen as the only likely bidder, with others seen as too laden with debt to get involved. Key potential suitors have signalled they were not interested, including world no.3 brewer Heineken , Japan's Asahi Breweries and Denmark's Carlsberg (CARLb.CO).
SABMiller has got to know the Australian market through its Pacific Beverages joint venture with Coca-Cola Amatil , so it has a good view on the turnaround potential in the business.
It is known for its discipline on acquisitions, having last year walked away from bidding for Mexico's FEMSA, bought by Heineken in an all-share deal worth $7.6 billion, including net debt, which valued the maker of Dos Equis beer at 11.2 times trailing EBITDA.
At an enterprise value of A$11.2 billion, SABMiller's bid for Foster's is already at 11.8 times trailing EBITDA.
It has agreed to pay C-C Amatil up to A$380 million for its stake in the joint venture, if it is successful with its bid for Foster's, which it needs to factor into how much it would be willing to pay for Foster's.
24 Jun. 2011