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.
Heineken sinks as damp summer, economy hit profits
Rounding off earnings from the world's top four beer makers, the Dutch group painted a familiar picture of economic uncertainty and unemployment driving Europeans and Americans away from bars and cafes, while emerging market consumers drink more.
"It's an implicit profit warning of 13 percent," said Trevor Stirling, beverage analyst at Bernstein Research.
"If you were an optimist you could say that tourists will go back to Egypt and summer in Europe would not be as bad next year, but Greece is unlikely to be better, Russia maybe not and barley prices will be a lot higher."
Heineken is Europe's largest beer maker, with the market leadership in Greece and Italy and number two spots in Ireland, Portugal and Spain, countries either bailed out or seen by many in the financial markets as in line for rescue.
The company's shares were the weakest in the FTSEurofirst 300 index (^FTEU3 - News) of leading European stocks in initial trading, dropping by as much as 16 percent to 30.40 euros, their lowest level in 21 months.
Food and beverage stocks were among the weakest in Europe. Shares of Anheuser-Busch InBev, with half of the sluggish U.S. market, were down 2.6 percent. Carlsberg (Copenhagen:CARLB.CO - News), which cut its outlook last week due to problems in Russia, were 1.9 percent lower.
Heineken trading conditions remained favorable in Latin America, sub-Saharan Africa and Asia-Pacific, but not in developed markets.
"We have seen a very bad summer ... At the same time, we also see in a number of markets, more in Europe and the USA, weak consumer confidence. You see uncertainty reflected in lower on-premise sales," CEO Executive Jean-Francois Boxmeer told a conference call.
Heineken has pushed into Mexico with its purchase last year of the brewing activities of FEMSA (Mexico:FEMSAUB.MX - News; NYSE:FMX - News) and has been buying breweries in Africa, notably Nigeria where it has some 70 percent of the market.
However, western Europe still represented 45 percent of revenue and 65 percent of operating profit in the first half.
Shares in SABMiller (LSE:SAB.L - News), with 70 percent of earnings outside Europe and North America and looking to push into Australia with its Foster's (ASX:FGL.AX - News) bid, were down a more modest 0.6 percent.
The Dutch brewer said it had already experienced weak beer sales in the normally high-selling season of July and early August due to poor summer weather in Europe and worsening consumer sentiment there and in the United States.
The company said this would affect second-half volumes and profit and it now expected full-year net profit before exceptional items and amortization of brands to be broadly in line with last year's level on a like-for-like basis.
Analysts had on average believed Heineken would forecast net profit growth of 12-13 percent.
In the first half, the comparable net profit rose 5.7 percent, excluding new consolidations and currency effects, to 694 million euros ($999 million), below the average forecast in a Reuters poll of 746 million euros.
The company reported first half operating profit of 1.26 billion euros, up 3.9 percent, compared with analysts' consensus forecast of 1.32 billion euros.
Heineken had said in April it expected higher planned marketing spending to hit profit after the first quarter, particularly across Europe. Analysts said it was unlikely to have yielded the desired benefits given unseasonably damp and cold weather in northern Europe in July and August.
"Developing and building brands are long-haul efforts. It's not because we witness an exceptionally bad summer -- you just look out of the window -- that we should take ourselves away from the efforts we are currently doing," Van Boxmeer said.
Heineken said it expected a single-digit percentage increase in cost of inputs such as barley, much of which are bought a year in advance. Sharply higher prices for raw materials will have a larger impact on brewing costs next year.
Malt barley future prices are 20 percent higher than a year ago.
24 Aug. 2011