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.
Beer market of Vietnam: “Young tiger”Vietnam is one of the few big beer markets that continue to grow steadily. The beer popularity results from its low price, street consumption culture, and social motives. The outlooks of beer market as well as the Vietnamese economy inspire optimism, though the country is heavily dependent on export of goods. The state regulation can be called liberal, but the key risk for brewers is harbored in intensive rising of excise. Within TOP-4 there are two leaders, Sabeco and Heineken that grow at the fastest rates. The first company effectively employs its capacities, the second one focuses on marketing technologies. Almost 80% of the market belongs to century-old brands, yet the middle class and the youth are shifting their interest toward international premium that is growing taking share from the mainstream.
Analysis of beer market in China (on Russian)
Beer market of Ukraine: big three losing weightIn 2016, fast increase of excises and resulting price spike stood in the way of the beer market stabilization. Most of competition (as well as mass sorts) moved to the economy segment of the market. The biggest losses were incurred by the leading three, especially Obolon, which again experienced pressure after reallocation of Efes market share. However, one should already speak of TOP-4. Group Oasis CIS (PPB) became a strong player and competitor to transnational companies. Besides the net sales of many regional medium breweries look rather good and 16-fold cost reduction wholesale trade license for craft brewers opens up a possibility of rapid growth in 2017.
Heineken Should Target Ethiopia, Congo for Growth, Africa Head De Man Says
The maker of Amstel and Star lager should target markets with relatively low beer consumption and fast-growing economies, which are supported by investment and, when necessary, global political intervention to aid stability, according to Tom de Man, who steps down from his role as president of Heineken’s Middle East and Africa unit in August. Rwanda and Burundi may also provide growth opportunities, he said.
De Man, 63, helped increase Heineken’s revenue in Africa and the Middle East to 1.98 billion euros ($2.8 billion) in 2010 from 846 million euros in 2003. The unit last year delivered an operating profit margin higher than any other region. Heineken got about 23 percent of its profit from Africa and the Middle East in 2010 compared with 33 percent from western Europe, the biggest contributor to revenue and profit. Nigeria, where Heineken first started brewing beer in 1949, is now the company’s biggest market in the region, De Man said.
“I compare most of our Africa breweries to ships,” De Man said in a telephone interview from Amsterdam. “You’re on the high seas, every now and then,” restricted by poor infrastructure and even political instability, he said.
Heineken, which competes with brewers including SABMiller Plc (SAB), Group Castel and Diageo Plc across the African continent, is already expanding in Ethiopia and said this year it will buy two state-owned breweries in the country. The company has 46 fully- or partially-owned breweries in Africa, excluding the two new purchases in Ethiopia.
Heineken has had a brewery in Kisangani in central Congo since 1957. The Dutch company brews or exports beers across all of Africa and the Middle East, with the exception of Libya, De Man said. Many African countries have a negative reputation, he said, even as their economies grow at a faster pace than the U.S. and eurozone.
“We only know the bad messages about it -- civil war, genocide -- but in the olden times, it was a developed area, and you see slowly and surely things are coming back,” he said.
Congo holds a third of the world’s cobalt reserves and 4 percent of all copper, and is recovering from more than a decade-and-a-half of conflict, which destabilised the country’s infrastructure and economy. Ethiopia is the world’s second- biggest recipient of foreign aid, after Afghanistan, according to the Organization for Cooperation and Economic Development. The country has recorded an average economic growth rate of 11 percent over the past seven years, according to government data.
“It’s been a bad time in Africa, but we’re talking about the ‘90s, when there was a lot of instability,” said Gerard Rijk, an analyst at ING Groep NV in Amsterdam. “In the last five years, there’s enormous money flow moving into Africa because of all the commodities.”
Hazardous roads, insufficient energy supplies and the difficulties of getting basic machinery for breweries all add to the challenges of operating in the continent, according to De Man, who was appointed as Heineken’s managing director for sub- Saharan Africa in 2003 and has also overseen the company’s expansion into markets including China and South Korea.
Heineken now employs a group of people who specialize in importing goods to Africa, even occasionally chartering planes to fly in brewing equipment, he said.
De Man learned the challenges of operating in Africa with his first posting as brewery manager at Nigerian Breweries Ltd. in 1973, where he spent three years in Aba, about 60 kilometers north of Port Harcourt in Nigeria. He took his family with him, home-schooling his child, and the only means of communication was via a short-wave radio. Heineken’s expansion in Nigeria, Africa’s second-biggest beer market, is among the things he’s most proud of, and he regards the company’s growth there as a blueprint for future expansion in the region.
The company now has 12 breweries in Nigeria, where the estimated population of 155 million, according to the CIA World Factbook, is three times bigger than in South Africa, the largest beer market in the region. Nigeria also has a relatively low per-capita consumption of beer, he said.
De Man said he’ll continue as non-executive director at some of Heineken’s African units after he retires, emphasizing the importance of handing on knowledge of “the scenery” in the region to his successor, Siep Hiemstra.
He’d also like to indulge his love of travel with a trip on the Congo river, perhaps on one of Heineken’s ships carrying supplies to inland breweries, he said.
“Thinking ‘invest before the market’ has proved very successful,” De Man said. “There’s so much growth that it’s a challenge for everybody to make sure you install sufficient capacity all the time in those countries to maintain and grow your positions.”
8 Jul. 2011