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.
Hop market remains in need of recovery
The hop crop in 2010 only totalled around 100,000 tons – a decrease of more than 12%. Germany produced 34% of the world hop crop, while the USA produced almost 30%.
Alpha production was also down by more than 13%, bringing it to 9,475 tons. Germany contributes a share of 36% to world alpha production, the USA 38%. Although the 3,400-ton surplus in alpha acids recorded for the 2009 crop year was almost halved in 2010, a production surplus of 1,800 tons still remained. Oversupply in the high-alpha hop segment remains the biggest challenge facing the hop industry.
Germany and the USA – world leaders in the hop market
These figures also make it clear that the USA and Germany are the world’s leading hop-producing nations in every respect, the Bath-Haas Group said. Almost two thirds of hops and around three quarters of alpha acids produced come from these two countries. What’s more, in Germany and the USA, growers achieve greater yields per hectare. In these two countries, a higher proportion of the crop is sold through forward contracts in comparison to the other hop-growing regions. These forward contracts provide producers, merchants and brewers with planning security.
Hop industry reacts flexibly to market changes
While crop years 2004 to 2008 were defined by a deficit in hop alpha acids, we have recorded a significant surplus in the last three years. Just to remind you: following years of oversupply, acreage was reduced so drastically in 2006 that crop volume no longer met demand in the brewing industry. As a result, the brewing industry concluded increasing numbers of forward contracts. The result was a rapid and extensive increase in acreage in order to secure supply of the necessary volume. The “old-fashioned” forward contract, which had not been used for years, experienced a renaissance with prices at a high level. This development primarily took place in the USA and Germany. Once the structural hop supply deficit was reversed in record time, the focus was on reducing hop acreage again to regulate the market. This is very difficult, as most hops are sold by growers many years in advance through contracts. Hop marketing companies in particular have to play their part here. Huge efforts involving restructuring forward contracts have made it possible to adjust hop supply to meet demand to some extent. As a result, storage facilities are overflowing and the liquidity of the company is under considerable strain.
Different market development within the variety groups despite generalised oversupply
Looking at the open market in terms of the individual variety groups, we can identify different developments. For one, the open market for high-alpha varieties is almost non-existent. When hops were sold, their prices were generally lower than the cost of production. A large amount of unsold stock remained in storage, particularly in eastern Europe and China. Aroma varieties, mainly from the USA and Germany, were placed on the open market, although prices tended to be average or low.
“Flavor Hops” represent a welcome development. This new hop variety fits into neither the classic alpha hop grouping, nor the aroma hops group. This new category consists of hop varieties with strong flavours, which produce beers that have unusually distinctive tastes. It is primarily in demand from the American craft brewer scene, as well as small breweries in other countries. In our opinion, this interesting market niche holds a lot of potential.
Clearing continues – but supply still seems secure
The efforts of the hop industry to strike a balance between supply and demand are having an effect. Around 49,000 ha are available for hop growing in 2011. That is 3,000 ha less than in 2010. This means that acreage is less than in 2006, when a low of a little less than 49,500 ha was achieved. A crop with average yields is still enough to cover demand for alpha acids. This is possible because of the vigorous planting of hop varieties with high yields and mainly high alpha acid values in past years.
However, no-one knows what the weather will be like until the crop is harvested. Furthermore, the possibility of poor harvests caused by damaged or diseased crops cannot be ruled out. In other words, hops are a natural product – so there is always a risk.
27 Jul. 2011