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.
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