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4-2017

Global hop market

A 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 Russia

Germany 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.

Carlsberg shares hit by Russia beer sale woes

Shares in Danish brewer Carlsberg A/S (CARLb.CO) slid on Wednesday on worries that its largest single market, Russia, could pass a law that would severely restrict beer sales.

Russia is considering a ban on the sale of beer with alcohol content of more than 0.5 percent between 11 p.m. and 8 a.m. in shops. The bill would also ban the sale of beer altogether at outdoor kiosks, train stations and street stands, at which around one third of Russia's beer is sold.

Carlsberg's stock, which touched a near four-month low of 546 crowns, traded down 2.5 percent at 556 crowns by 1030 GMT, against a 0.6 percent fall in the Copenhagen bourse's blue chip index markets

Carlsberg, the beer market leader in Russia which accounts for about 40 percent of the group's total beer volume, owns the Baltika brand.

Deputy Prime Minister Victor Zubkov held a meeting on Tuesday on the bill, which is expected to be passed by the end the week, just before the Duma goes on summer recess.

The ban would take effect from January 1 2013.

"Of course it will have an effect on Carlsberg, but it is difficult to estimate how big," Alm. Brand analyst Stig Nymann said. "This sounds worse than what we have been presented with before."

Carlsberg's spokeswoman for eastern Europe, Tatiyana Antonchik, said the company was following the situation but it was difficult to know exactly what was on the agenda.

"Before we see the bill itself it is difficult to make a decision," Antonchik said. "We won't know until we see the draft bill ... This time they will try to make it more strict."

Jyske Markets analyst Jens Houe Thomsen said in a note to clients that the proposed restrictions would pose a challenge for brewers but one they could cope with.

"We therefore maintain our 'buy' recommendation (on the stock) and see today's share price drop as a buying opportunity," Thomsen said.

The Russian market grew about 1 percent in the first quarter of this year and Carlsberg said last month it expected the market to grow by between 3 and 5 percent in the medium term as the economy recovers.

Reporting first-quarter results in May, Carlsberg said a recovery in eastern European demand helped drive a 38 percent rise in profits.

7 Jul. 2011

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