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.
Foster’s Says No Contact With SABMiller Since Bid Rejected
“No contact at all,” Chief Executive Officer John Pollaers said in an interview in Melbourne, after speaking at a business breakfast. London-based SABMiller, the world’s second- largest brewer by volume, said June 21 it would “seek engagement” after Foster’s rejected the cash offer as too low.
Pollaers, who has run the beer business for 14 months, is focusing on stemming market-share losses and cutting production costs to free up cash and boost promotion of brands. He’s also developing new brews to win back consumers who switched to sweeter pre-mixed drinks and craft beers.
“He is right in sticking to his job and not things outside of his control,” said Theo Maas, who helps manage about $5.4 billion at Arnhem Investment Management in Sydney, including Foster’s stock. “He runs a pretty attractive asset, and hopefully the market will be better next year and we will see more growth numbers coming out of the business.”
In May, Melbourne-based Foster’s spun off its wine unit Treasury Wine Estates Ltd. to focus on the beer business, where it has suffered five years of market share losses, including for the nation’s top-selling brew Victoria Bitter.
Foster’s has managed to stem losses in market share after it revamped how it deals with customers as a specialist brewer rather than the “multi-beverage” strategy of Pollaers’ predecessors who combined beer and wine sales teams.
“Twelve months on we’ve stabilized our market share, in fact grown our market share, and the attention to fundamentals is paying off,” Pollaers said today. “I’m not, and the team aren’t, allowing anything to distract us from that.”
Foster’s shares fell 0.2 percent to A$5.15 at the 4:10 p.m. close of Sydney trading. The stock, after adjusting for the spun-off wine unit, has surged 24 percent since announcing the potential split on May 26 last year. The benchmark S&P/ASX 200 index has gained 8 percent in the same period.
SABMiller bid A$4.90 a share in cash for Foster’s, an offer the Australian brewer said “significantly undervalues” the stock.
Half of Market
The acquisition would be SABMiller’s biggest and give the maker of Castle lager about half of Australia’s beer market. SABMiller has made a series of acquisitions including Colombian brewer Bavaria and the Grolsch brand since it began selling beer to gold prospectors in South Africa in 1895, propelling the company to its ranking behind Anheuser-Busch InBev NV.
SABMiller Chief Executive Officer Graham Mackay has made more than two dozen acquisitions since he moved the brewer’s listing to London in 1999, though he’s passed on some of the industry’s biggest deals since 2008. He shunned buying the beer unit of Fomento Economico Mexicano SAB last year after rival Heineken NV (HEIA) paid up a price it deemed too high.
Mackay told analysts last week that Australia is among the world’s most profitable countries to make and sell beer. It takes the average worker 12 minutes to earn enough money to buy half a liter of beer, less time than in Canada or in Spain, he said.
Acquiring Foster’s would boost SABMiller’s profitability. Foster’s beer business had a margin, which measures earnings before interest and taxes as a proportion of revenue, of 37 percent in the 12 months ended June 2010, the company said in February, citing the most recent full year of data. That’s the widest of any independent brewer in the world and exceeds the 23.5 percent at SABMiller and 30.8 percent at Anheuser-Busch InBev NV (ABI), according to data compiled by Bloomberg.
1 Jul. 2011