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.
Kirin Holdings reports sales down 1%, net profit up 151% in H1 2011
Kirin for the the first six months of the current fiscal year posted a net profit of ?17,904 million, compared with a year-earlier profit of ?7,156 million. Operating income was ?72,812 million, up from ? 59,826 million in the same period of 2010. Sales in the first six month of 2011 were 1,001,445 million, down by 0.9% from ? 1,010,177 million a year earlier.
Although the Great East Japan Earthquake affected production, distribution and sales, both at Kirin Brewery Company, Limited and at its other Group companies, operations are gradually being returned to normal.
Under the economic conditions, the Kirin Group has, in the second year of the second stage “2010-2012 Kirin Group’s medium-term business plan”, strengthened its approaches for “qualitative expansion” for realizing its long-term business framework, “Kirin Group Vision 2015” (KV2015). In the Japanese market, Kirin continued to pursue an integrated beverages group strategy focused on Kirin Brewery Company, Limited and Kirin Beverage Company, Limited, and under the direction of functionally organized Cross Company Teams (CCTs), Kirin worked to increase profitability and efficiency across the Group.
Furthermore, in order to concentrate its management resources in the Wine and Alcoholic Beverages Business, Mercian Corporation signed an agreement with Mitsui & Co., Ltd. in April regarding the transfer of its Pharmaceuticals and Chemicals Business. Overseas, and Kirin has been proceeding to strengthen its business in the soft drink markets of China and Southeast Asia, where rapid growth is expected. In January, Kirin reached an agreement with China Resources Enterprise, Limited to establish a joint venture to operate non-alcohol beverage business in China, and in March, Kirin concluded acquiring shares of the Interfood Shareholding Company, a soft drink manufacturer and distributor in Vietnam. As a result, sales, operating income, ordinary income and net income increased in the second quarter. As for damage caused to products, equipment and so forth by the earthquake, ?16.9 billion was recorded under special expenses as a loss related to the Great East Japan Earthquake.
In August, the Kirin Group acquired a 50.45% shareholding in the Schincariol Group, which has interests in the beer and soft drink industries in Brazil. The acquisition gives the company a foothold in the fast-growing Brazilian marketplace to complement its existing business operations in Asia and Oceania, and represents a key plank in the deployment of the company’s integrated beverages group strategy in the international arena.
Domestic Alcohol Beverages Business (including wine business)
- Consolidated sales: ?392.3 billion, down 6.4%
- Consolidated operating income: ?28.8 billion, up 29.0%
In the domestic alcohol beverages business, sales volume temporarily decreased at Kirin Brewery Company, Limited following the Great East Japan Earthquake. This was due to production being suspended at a number of factories, a shortage of materials for manufacturing cans, logistical constraints such as the procurement of fuel, and a decline in consumer sentiment. Subsequently, though, manufacturing and supply systems have gradually been restored, and there have also been signs of slow but steady improvements in consumer sentiment.
Amid such conditions, Kirin Brewery Company, Limited put more effort into strengthening core brands, and managed to maintain strong sales in such labels as Kirin Ichiban Shibori, Tanrei Green Label and Kirin Nodogoshi Nama. Furthermore, in the new genre categories, which are continuing to expand, we sought to further increase demand with the February release of Kirin Koiaji (Zero Sugar) (sales were suspended temporarily due to the impact of the earthquake, and the product was relaunched in June), particularly targeted at health-conscious consumers.
In the RTD (ready to drink) market, the company worked hard to further enhance its market presence. In addition to renewing our Kirin Chuhai Hyoketsu standard series, Kirin released the Kirin Chuhai Hyoketsu Yasashii Kajitsu no 3%, the launch of which had been postponed due to the impact of the earthquake. As a result, sales volume, which had decreased briefly following the earthquake, has slowly but steadily been recovering.
Furthermore, following the earthquake, although production had been suspended at the stricken Sendai and Toride factories, steady progress was made in the repair work at the Toride Plant, and operations resumed in early April. At the more heavily damaged Sendai Plant, as operations remain suspended, Kirin has conducted cleanup work and equipment inspections. With the resumption of the power supply to the plant in July, the company said it is confident that operations can be returned to normal. Kirin plans to resume brewing beer in late September and to complete its first shipment in early November.
Moreover, although the Great East Japan Earthquake had resulted in partial damage being sustained at the automated warehouse at our Fujisawa Plant, as well as some shipping adjustments being needed due to a short supply of packaging materials, Kirin has resolved these problems as they occur, it said.
Overseas Beverages Business
- Consolidated sales: ?232.5 billion, up 27.6%
- Consolidated operating income: ?11.4 billion, down 22.1%
In Australia, Lion’s alcohol beverages and soft drinks & foods businesses continued to make progress in improving mix and efficiency by pursuing a strategy of investing in people and a focused portfolio of high potential brands to drive sustainable results in the long term. Conditions in the Oceania market were particularly challenging, compounded by an unusually cold summer, which is a key sales period for alcohol beverages, and two natural disasters – floods in Queensland and the earthquakes in New Zealand. Conditions in the soft drinks & foods business remained very difficult for farmers and processors alike, driven by deep discounting of white milk in retail. The business was also impacted by the loss of key private label contracts. Also, business results have been included since the second quarter for Interfood Shareholding Company, the soft drink manufacturer and distributor in Vietnam for which the acquisition of shares was completed in March.
For the full fiscal year 2011, Kirin lowered its net profit outlook to ?52,000 million, while it cut its sales estimate to ?2,110,000 million.
Kirin Responds to Reports concerning Acquisition of Schincariol Group Shares
There have been reports concerning Kirin Holdings’ acquisition of Schincariol Group shares announced on Tuesday that minority shareholders of Schincariol Group are claiming that the transaction is illegitimate.
Kirin is aware that these claims are being made and based on prior consultations with local attorneys concerning the lawfulness and validity of the transaction, the company has proceeded with the acquisition with the understanding that the transaction is legitimate. Kirin will continue to monitor this matter to ensure that it is handled properly, it said.
8 Aug. 2011