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 Raises Latin American Volume Goal Amid Focus on Affordability
The company predicts volume growth of 5 percent to 8 percent in the region, up from a previous forecast of 4 percent to 6 percent, Karl Lippert, SABMiller’s president for Latin America, said today at a conference in London. Revenue per hectoliter will increase by 2 percent to 4 percent, down from a previous forecast of 3.5 percent to 5.5 percent.
SABMiller is focusing on an “affordability strategy,” as about 56 percent of the company’s consumers in Latin America have income at or below the minimum wage, Lippert said.
“These countries are sitting with very high prices” for beer when compared historically with the rest of the world, Lippert said. “We’re looking for opportunities to democratize beer.”
SABMiller rose 30 pence, or 1.3 percent, to 2,320 pence at 2:28 p.m. in London trading.
The Latin American unit was the largest contributor to sales and profit for London-based SABMiller last year. The brewer, which sells beers including Cusquena and Aguila in the region, reported growth of 11 percent in so-called organic earnings before interest, taxes and amortization last year, outpacing Europe, while lagging behind the group average of 12 percent. Lager volume was level with the prior year.
SABMiller has focused on its affordability plan in Colombia, Honduras and El Salvador, selling beer in larger bottles at slightly cheaper prices to appeal to drinkers in bars, or selling multipacks of cans for consumers to drink at home, which has been successful so far, Lippert said. The company maintained its margin growth target of an increase of 60 to 100 basis points.
The volume of beer sold in Colombia slid last year after the country’s government increased the value-added tax on beer to 14 percent from 3 percent in February 2010, prompting SABMiller to increase prices. Widespread flooding also hurt beer sales in the country. The company said Colombia accounts for more than half its sales in the region. Colombia saw “double- digit” growth last month as the weather improved, Lippert said.
Latin America’s gross domestic product is forecast to grow 4.8 percent between 2010 and 2015 on a compound annual growth rate basis, the company said, in line with its African markets and outpacing its North America, South Africa and central and eastern European units.
Latin American countries in which SABMiller operates have average alcohol consumption of 38 liters a person, compared with 77 liters in North America, the company said.
In November, SABMiller bought Cerveceria Argentina S.A. Isenbeck, the third-largest brewer in Argentina, entering a market dominated by Anheuser-Busch InBev NV, the biggest beermaker in the world. The integration was “tough at the start” but has “settled down with a good team there,” Rob Priday, president of the company’s Peruvian unit, said today.
The acquisition spurred speculation that the company may also seek to enter Brazil, the third-biggest beer market in the world, including a possible acquisition of Primo Schincariol Industria de Cervejas & Refrigerantes, Brazil’s second-biggest brewer. Diageo Plc, the maker of Guinness stout, dropped plans to bid for the brewer, two people familiar with the matter said July 1.
“There is of course some stuff on the table” in Brazil, Lippert said today. “You’d expect us to look,” he said, referring to Schincariol. He declined to comment further.
First-quarter trading in Latin America has been positive, driven by “very good” performances in Colombia, Peru, Honduras and El Salvador, Lippert said. The company’s fiscal year ended on March 31.
SABMiller today declined to comment on its pursuit of Foster’s Group Ltd. (FGL) after its A$9.5 billion ($10 billion) bid was rebuffed June 21 by the Melbourne-based brewer.
7 Jul. 2011