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.
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.
APB Restructures China Investments To Focus On International Premium Brand Strategy
Intensifies International Premium Brand Strategy Across China
Underlines commitment to the China beer market with further expansions at breweries in Guangzhou and Hainan
Forging ahead with its premium brand strategy in China, Asia Pacific Breweries Ltd (APB), together with Asia Pacific Investment Pte Ltd1, is divesting its stakes in Jiangsu Dafuhao Breweries Co., Ltd (DFH) and Shanghai Asia Pacific Brewery Company Limited (SAPB) via the sale of all the issued shares in Heineken-APB (China) Pte Ltd2 (HAPBC) to China Resources Snow Breweries Limited.
The proposed RMB870 million transaction (equivalent to approximately S$162 million) excludes its beer brands, Tiger, Heineken and Anchor; as well as the following entities:
i. Guangzhou Asia Pacific Brewery Co Ltd;
ii. Heineken APB (China) Management Services Co. Ltd;
iii. Hainan Asia Pacific Brewery Co. Ltd; and
iv. Heineken Trading (Shanghai) Co Ltd.
The sale price represents a gain of approximately S$46.6 million after deducting related expenses. By virtue of its 50% stake in HAPBC, APB’s share of the gain on disposal is approximately S$23.3 million.
The rationalisation is aligned with the Group’s plan to take its international premium brands, Tiger and Heineken, to yet another level of success in the world’s largest beer market and to ensure the optimisation of its production capacities in China.
Elaborating, Mr Roland Pirmez, Chief Executive Officer, APB said, “The three key pillars of our international premium brand strategy comprise a distinctive portfolio of international beer brands; strategic marketing and extensive distribution; and optimal production facilities. As DFH and SAPB do not align with this strategy, it only makes business sense for us to divest both assets. Going forward, we shall further optimise our production capacities in Hainan and newly-commissioned brewery in Guangzhou to cater to the demand for our beers in China."
The international premium brand strategy is designed to ride on rising affluence, growing urbanisation and increasing consumer sophistication in China. In 2010, China consumed 448 million hectolitres of beer, 6.3% higher than the year before. Its 12-million hectolitre premium segment has benefited from this trend of premiumisation, resulting in an increasing desire for fine quality international beers.
To capitalise on the opportunities and secure a national presence across China, APB has established an extensive sales and regional network in most parts of China. Complementing this is its strategic marketing that leverages the strong brand equity and international success of Tiger and Heineken while beer supplies will be tapped from the breweries in Hainan and Guangzhou.
To fulfill strong demand for Tiger and Heineken which have been experiencing double-digit growth as well as to ensure the supply of beers nationwide, the Group is expanding production capacities in Hainan and Guangzhou to 2 million and 1.5 million hectolitres respectively. The developments will mark a 33% increase in production capacity at the Hainan brewery while that of the newly-commissioned Guangzhou brewery will improve by 50%.
The transaction is expected to complete in approximately three months.
1Asia Pacific Investment Pte Ltd is a 50-50 joint venture between the Heineken group and Fraser and Neave, Limited.
2 Heineken-APB (China) Pte Ltd is a 50-50 joint venture between APB and Asia Pacific Investment Pte Ltd
14 Jul. 2011