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.
Influx of brands comes to Russia despite new law on beer
“This was made just two days ago. It’s fresh,” said Masaru Hemmi, chief brewer of Japan’s Kirin Ichiban, pouring at the Moscow Beer Company’s factory in Mytishchi. The occasion was last month’s start of licensed local production of Ichiban.
Both sides feel justified in pouring a few well-earned drinks. The Moscow Beer Company reckons it can sell Ichiban, which is one of the most popular beers in its home country, to Japanese restaurants and food enthusiasts. Ichiban is confident it has secured its foothold in the $20 billion Russian beer market.
Despite the optimism, these are not easy times for Russian brewers. Over the past decade, the beer market surged by 40 percent, but then the global economic crisis, increased taxes on alcohol and saturation depressed the market by as much as 15 percent, causing the country to slip from third to fourth place worldwide for total consumption.
“Russia has lost 12 [million] to 15 million hectoliters [roughly 10.26 million to 12.78 million U.S. beer barrels],” said Igor Dementyev, general director of The Moscow Beer Company, a midsized brewer. “That means that approximately five or six breweries like us should be closed. And it is happening; a lot of breweries have been closed and will be closed.”
Domestically produced beers, like cars, carry a certain amount of stigma. Even foreign brands produced under license are widely considered to be inferior to genuine imports. Specifically, this is linked to an alleged propensity to cause headaches.
“Abroad, drinking a six-pack of Heineken is no problem. Here, two bottles will give me a headache,” complained one beer aficionado.
One urban legend links the mysterious headaches to extra alcohol — or more sinister chemicals — added to popular brands to keep the population docile.
However, there’s not much choice but to buy Russian. High import tariffs mean that imported beers make up just 0.5 percent of the market — compared with about 15 percent in the United States.
In Russia, that segment is largely replaced by licensed domestic production. There are more than 40 foreign brands now produced locally — ranging from classic Czech lagers such as Pilsner Urquell (produced by SABMillerin Kaluga) to iconic Irish stout Guinness (produced by Heineken in St. Petersburg).
The Moscow Beer Company has seven licenses on the books, including a 40-year contract to produce German Oettinger and a 25-year contract with Denmark’s Faxe, as well as its new deal with Kirin. The local beer market is a battlefield of giants, with little room for small independent breweries. Carlsberg Group, AB InBev, Efes Breweries International, Heineken and SABMiller together control more than 85 percent of the market.
Baltika, which is the biggest brand and part of the Carlsberg Group, has a total brewing capacity of 5.2 million hectoliters [approximately 4.4 million U.S. beer barrels] per month.
By comparison, The Moscow Beer Company, which started out as an importer of beers and soft drinks in 1994 and only began producing its own brews in 2008, turns out just 2.5 million hectoliters [approximately 2.1 million U.S. beer barrels] per year.
Market analysts now say Brazil has displaced Russia from its place as the world’s third-largest beer maker, and Germany is snapping at Russia’s heels to move into fourth. So what went wrong?
For a start, Russia is not really among the great beer-drinking nations. Even after the rapid growth in consumption over the past decade, Russians consume just 66 liters (about 139 U.S. pints) of beer annually per capita, according to estimates by Baltika.
Czechs get through a staggering 151 liters (about 319 U.S. pints), while Germans drink 108 liters (about 228 U.S. pints) annually, according to a 2010 report by Carlsberg.
Experts put the drop down to three factors: The market was probably saturated anyway; the financial crisis of 2008 ate into disposable incomes; and the government has drastically ratcheted up taxes on beer.
The beer excise went up 200 percent, from three rubles per liter to 9 rubles per liter, in January 2010. This year the tax is up to 11 rubles, and plans exist for further hikes.
The real heavy hitters are the Russian brands — which account for the remaining 85 percent of the market. The biggest selling local brand (and the jewel in Carlsberg’s Russian crown) is the Baltika product line, which accounts for 40 percent of all beer sales in Russia.
16 Aug. 2011