The beer market dynamics in Russia is approaching zero, yet major brewers are divided into those who developed considerably in 2017 and those who considerably reduced their volumes. For instance, company Efes has managed to substantially extend their sales due to restrained pricing policy and activity in the modern trade. Heineken has also demonstrated an excellent performance promoted by significant increase of advertisement budgets launching a non-alcohol sort of the title brand and unusual activity in the economy market segment. Carlsberg and AB InBev have been focusing on margins and lost a market share of their inexpensive brands. Serious dependence on PET package and mass enthusiasm about Zhigulevskoe have negatively impacted the most of big regional brewers, that have been for the first time pressed by the leaders in the key sales channels, especially in Volga and Central regions. In the small business there has been a noticeable slowdown in appearing of new restaurant breweries, yet the number of craft breweries has been growing rapidly. In 2018, the beer market is likely to grow a little, while the share of AB InBev Efes may decrease due to the integration. ...
“Catalogue of Russian Beer Producers 2018” includes 1070 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft microbreweries.The catalogue includes 32 large breweries, 75 regional breweries, 693 industrial mini- and microbreweries as well as 270 restaurant breweries. ...
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.
Foster’s May Use Buyback to Fend Off SABMiller
Fosters, which reports full-year earnings tomorrow, may return as much as A$1 billion ($1 billion) in capital to shareholders, using cash from tax refunds and lower debt to boost the share price, analysts at Citigroup Inc. said.
Australia’s biggest brewer is fending off SABMiller’s bid and trying to stem market-share losses as natural disasters and slumping consumer sentiment crimp the developed world’s widest brewing profit margins. Pollaers, a former Australian Navy weapons engineer who spent almost 20 years at spirits maker Diageo Plc (DGE), is betting that spending more on brands and lowering production costs will restore profit growth.
“He seems to be the right man in the right place,” said Theo Maas, who helps manage $5 billion of equities at Arnhem Investment Management Pty. in Sydney. “He is managing in a very difficult environment, and while it would be a lot easier to just deliver strong numbers and say it only gets better, he can’t.”
Earnings before items probably fell 7.7 percent to A$494 million in the 12 months ended June, according to the median estimate of three analysts surveyed by Bloomberg News.
Foster’s shares fell 0.6 percent to A$4.90 at the 4:10 p.m. close of Sydney trading, matching SABMiller’s cash offer. The stock has risen 7.2 percent so far in 2011, and has gained in three of the past nine years.
Pollaers has been CEO of Foster’s since it completed the spinoff of Treasury Wine Estates Ltd. in May, ending the company’s 15-year involvement in wine that cost more than A$8 billion to build and resulted in about A$3 billion of writedowns.
The company has refused to enter talks with SABMiller since rejecting a bid on June 21, arguing the A$4.90 a share offer, which will be reduced by the amount of any dividends paid, “materially undervalues” the company.
Foster’s is worth about 12.3 times forward earnings before interest, taxes, depreciation and amortization in a bid situation, according to Citigroup, which recommends investors “hold” their Foster’s shares.
SABMiller said in June the offer valued Foster’s at about 12.5 times earnings before interest, tax, depreciation and amortization and stuck by that valuation last week. InBev NV paid about 13.2 times Anheuser-Busch Cos. in the 2008 purchase, the industry’s largest, that created Anheuser-Busch InBev NV, according to data compiled by Bloomberg.
SABMiller said Aug. 17 it would go directly to Foster’s investors after the board declined to start negotiations.
“We are not saying we would never engage,” Pollaers said in Melbourne on July 29. “The value put on the table there was just so far away from reality, it wasn’t worth engaging.”
Pollaers wasn’t available for an interview before the results release, said Andrew Butcher, a spokesman for Foster’s external media adviser Butcher & Co.
“Foster’s is likely to increase the stakes on Aug. 23 with its fiscal 2012 outlook commentary, requiring SABMiller to increase its bid,” analysts at Nomura Holdings Inc. led by David Cooke, said in a Aug. 17 report. “We anticipate Foster’s commentary will include detail on cost reduction programs and capital management.”
Foster’s net income will probably be A$714 million for the year ended in June, according to the average of three analysts’ estimates compiled by Bloomberg, which included contributions from Treasury. The company posted a loss of A$464 million in the previous year on writedowns from the wine business.
Foster’s has said it’s increasing advertising on brands including Victoria Bitter, Australia’s best-selling beer, and Pure Blonde and is paring the workforce at its Melbourne brewery to cut costs.
“The company’s first beer-only result for 15 years will likely be characterized by declines in both net sales revenue and margins,” Andy Bowley, an analyst at Citigroup, wrote in an Aug. 18 report. He rates the stock “hold.”
Prior to taking charge of the whole company, Pollaers ran Foster’s domestic beer business for 13 months. He has a masters of business administration through a joint program by INSEAD and Sydney’s Macquarie University and has degrees in electrical engineering and computer science, according to Foster’s website.
He started at London-based Diageo, the maker of Johnnie Walker scotch, in 1990 and had roles at the London-based company including U.K. finance director, Australian head and President of the Asia-Pacific region before joining Foster’s.
The takeover offer from the maker of Miller Lite and Grolsch will have to rise by about 6 percent to A$5.20 to succeed, according to the median estimate of 13 analysts surveyed by Bloomberg News.
“The failure of competing bidders to emerge, volatility in world financial markets and the prospect of poor trading in Australian beer in the six months to June, appear to have strengthened SAB’s hand,” analysts at Barclays Capital including Simon Hales wrote in an Aug. 18 note.
Foster’s beer operating margin, or earnings before interest and taxes as a proportion of revenue, may fall to 37.5 percent from 38.3 percent in their first decline in a decade, according to Citigroup.
That’s still more than the 23.5 percent of SABMiller and 30.8 percent at AB InBev, the world’s biggest brewer, according to data compiled by Bloomberg.
January’s flooding in Australia’s Queensland and Victoria states, two of the nation’s three most populous, as well as the February earthquake in New Zealand’s Christchurch sapped demand. Australian consumer sentiment last month fell to the lowest level since May 2009, according to a Westpac Banking Corp. and Melbourne Institute survey.
“The value in Foster’s has always been about the longer- term cash potential of the business and limited reinvestment requirements,” Paul Van Meurs, an analyst at Deutsche Bank AG in Sydney, said in an Aug. 18 report. “While the consumer environment undoubtedly has taken a turn for the worse in the last few weeks in Australia, we find it hard to believe that structural change has taken place during this period.”
22 Aug. 2011