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.
Why Asahi Isn’t Buying Foster’s
On Thursday, Asahi sealed its own biggest-ever deal to buy New Zealand’s Independent Liquor –- for little more than 1/10 of that price.
Back in the 1990s, Asahi had a stake of nearly 20% in Foster’s. With a stake that size, the Japanese company could have been kingmaker in the battle for the latest object of the global brewing business’s desire. Or even launched its own offer.
But frustrated by Foster’s inability to make its targets, not to mention a lack of dividend payments, Asahi sold out of the Australian company in 1997. And in an indirect way, it’s the hangover from that Foster’s deal, first struck in 1990, that shaped Asahi’s future: The company must keep growing overseas to compensate for Japan’s sluggish domestic market — just don’t expect it to risk any mega-deals.
Asahi’s success story with the advent of mega-hit “Super Dry” in 1987 is well-known in Japan, as are ads of international go-getters and corporate achievers downing the brew. But that came after a sales slump in the mid-1980s, when its market share fell to less than 10% at one point. It’s been a long and expensive haul for Asahi to get back into a position where it can challenge local arch-rival Kirin Holdings Inc. for the No. 1 beer-sales spot in Japan’s cut-throat market, with Suntory Holdings Inc. also breathing down its neck.
While Asahi saw the need for investment in overseas operations like Foster’s early enough, with its finances strained by the need to ramp up at home, it couldn’t afford to wait for the returns to start rolling in overseas. Ditto unsuccessful 1990s efforts to profits on China’s red-hot economy.
More than a decade later, Asahi’s position in Japan, and its financial health, is much fortified. But that focus has left it trailing rivals in international sales, something it must address as Japan’s population ages and shrinks. Back to the overseas acquisitions trail, then, but with a difference from giants like SABMiller: It’s not that Asahi doesn’t have money to burn -– it has war chest of $10 billion available for M&A in the period up to fiscal year 2015 -– it’s just that it’s not about to splurge the lot on one big-ticket deal.
Since 2009, Asahi has quietly spent about $2.5 billion buying companies, and Independent Liquor takes its spending so far this year to more than $1.8 billion. These smaller, bolt-on acquisitions are designed to catapult it into the top 10 in the global food and beverages sector by 2015. It is now ranked 13th.
Whether the low-key approach will pay off in the end remains to be seen. Asahi still has a long way to go to bring its overseas sales to 20%-30% of its targeted sales of $26 billion-$32 billion by 2015: In 2010, Asahi’s overseas sales made up a mere 6.6% of overall sales, while Kirin’s overseas sales ratio was 23%.
But Asahi needs to accelerate wherever it can. As the pace of consolidation in the industry heats up, it won’t have escaped the attention of some that at about $10 billion, Asahi’s current market value is about equal to the latest SABMiller offer for Foster’s.
19 Aug. 2011