The beer market dynamics in Russia is approaching zero, yet major brewers are divided into those who developed considerably in 2017 and those who considerably reduced their volumes. For instance, company Efes has managed to substantially extend their sales due to restrained pricing policy and activity in the modern trade. Heineken has also demonstrated an excellent performance promoted by significant increase of advertisement budgets launching a non-alcohol sort of the title brand and unusual activity in the economy market segment. Carlsberg and AB InBev have been focusing on margins and lost a market share of their inexpensive brands. Serious dependence on PET package and mass enthusiasm about Zhigulevskoe have negatively impacted the most of big regional brewers, that have been for the first time pressed by the leaders in the key sales channels, especially in Volga and Central regions. In the small business there has been a noticeable slowdown in appearing of new restaurant breweries, yet the number of craft breweries has been growing rapidly. In 2018, the beer market is likely to grow a little, while the share of AB InBev Efes may decrease due to the integration. ...
“Catalogue of Russian Beer Producers 2018” includes 1070 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft microbreweries.The catalogue includes 32 large breweries, 75 regional breweries, 693 industrial mini- and microbreweries as well as 270 restaurant breweries. ...
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.
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