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.
US. What Is Wrong With Miller Lite?
MillerCoors still has a Miller Lite problem, with the brand failing to emerge from its long-running slump in the second quarter.
Sales to retailers fell by "mid-single digits," which contributed to a 2.7% sales decline across all of the brewer's brands in the quarter, the brewer reported today. MillerCoors, a joint venture of Molson Coors and SABMiller, was still able to grow earnings by 2.6% in the quarter to nearly $400 million, thanks in part to strong cost management, the company said.
But Lite's decline, which came at the beginning of the all-important summer beer-selling season, is an ominous trend, considering that it had shown signs of life in the first quarter, with sales to retailers only down slightly. The slump could also put more pressure on the brand's ad agency, Interpublic Group of Cos.' DraftFCB, to find marketing solutions quickly in advance of the upcoming football season, another key period for beer sales. (DraftFCB is already under stress after losing one of its biggest accounts last week, SC Johnson.)
"Miller Lite definitely took a step backward in the second quarter and it does suggest they still have some work to do in the marketing front," said Benj Steinman, editor of Beer Marketer's Insights.
Still, MillerCoors did not signal any major marketing changes for the brand, instead pinning some of the losses on external factors such as the weak economy, record rainfall in many parts of the country -- which could limit beer occasions -- and higher fuel prices, which officials said "all impacted consumer spending on beer."
"We would like [Miller Lite] to be growing faster, obviously," MillerCoors CEO Tom Long said on a call with analysts. "We are putting more pressure on its marketing position," he said. He added that "we do not plan to fundamentally change our policy on Miller Lite, but we are going to keep working on it."
In an interview, MillerCoors spokesman Julian Green said: "We very pleased with DraftFCB's work on our flagship brands." Miller Lite is the nation's fourth-ranked beer brand by shipment volume, but has suffered declines of 3.9% last year and 6.6% in 2009, according to Beer Marketer's Insights.
With DraftFCB at the helm, MillerCoors has sought to position Lite as the light beer with the most taste with its "Man Up" ads that mock men who choose other brands. It is arguably a tougher sell than the cold positioning MillerCoors uses for sibling brand Coors Light, which has ridden the "world's most refreshing beer" message to stellar growth. That growth has put it on the verge of overtaking Anheuser-Busch's Budweiser as the nation's second-ranked beer by shipments. (A-B's Bud Light is the No. 1 beer brand.) Coors Light is also handled by DraftFCB.
On today's earnings call, analysts suggested more radical changes for Miller Lite, prompting a few testy exchanges with Mr. Long, who took over as CEO on June 1. Credit Suisse's Carlos Laboy suggested the brewer was placing too much blame on the economy and weather, noting that its other brands fared better, such as Coors Light, which was up slightly in the quarter, and Blue Moon, which continued its double-digit growth. "The only unemployed consumers who keep getting rained on are the Miller Lite consumers," Mr. Laboy said sarcastically. He suggested that MillerCoors try dropping the price on Miller Lite. (In an analyst's note published Monday, he called Lite "structurally impaired" and said it "needs a new strategy.")
Mr. Long on the call replied that "we consider the price on the brand every day by market." But he said a general price decrease would not work because "taking a brand down, it almost never comes back."
So why is Miller Lite underperforming Coors Light? MillerCoors officials suggested one reason could be that Lite relies more on sales in bars and restaurants, which have been weak because fewer people have gone out in the tough economy.
3 Aug. 2011