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.
Diageo Surges After Posting Profit Growth on Emerging-Market Whisky Sales
The stock gained as much as 6 percent, the biggest intraday advance since October of last year. Full-year operating profit rose 5 percent on a so-called organic basis as higher sales of whisky, including the Johnnie Walker brand, in emerging markets offset a slide in Europe. That matched analysts’ estimates.
Diageo set a “medium-term” goal to improve sales on a so- called organic basis by an average 6 percent, stronger than last year’s 5 percent growth. The distiller said business in July and August held at the levels of the previous six months, providing some relief for investors after brewer Heineken NV (HEIA) yesterday reported a weakening in sales during those months.
“The clarity on the medium-term outlook is welcome,” said Martin Deboo, an analyst at Investec Securities in London. Diageo’s commitment to “decent margin improvement” is also positive, said Deboo, who has a “hold” rating on the stock.
The maker of Smirnoff vodka and Captain Morgan rum said today that it’s seeking to improve operating margin, a measure of profitability, by 200 basis points in the next three years, and to grow earnings per share at a “double-digit” rate.
“Medium-term guidance looks to be setting targets that are tough but achievable and also make Diageo look attractive as an investment proposition if achieved,” Phil Carroll, an analyst at Shore Capital in London, wrote today in a note.
Diageo’s shares traded at 1,171 pence as of 9:30 a.m. in London, up 4.7 percent, or 53 pence. The stock is down 1.2 percent this year, compared with an 11 percent drop in the U.K. benchmark FTSE 100 index.
“The news from Heineken yesterday was discouraging for people,” Deirdre Mahlan, Diageo’s chief financial officer, said today in a telephone interview. “We just wanted to make sure our good news was heard by the market.”
Heineken, the world’s third-biggest brewer by volume, yesterday fell by a record in intraday trading after saying it anticipates annual profit that was little changed.
Mahlan said business at Diageo in July and August had “continued along the trajectory we saw” in the second half.
Diageo, which spent 1.6 billion pounds last year expanding into emerging markets, said sales of Scotch whisky and its more expensive “reserve brands,” including Tanqueray Ten gin and Ron Zacapa rum, helped offset tough conditions in Europe.
Chief Executive Officer Paul Walsh said in a Bloomberg Television interview today that growth is “polarized” in Europe, held back by Greece and Spain. Sales slid 3 percent in the region. Diageo expects the volume of drinks sold in Europe this year to show “flattish to low growth,” Mahlan said.
Full-year net profit rose to 1.9 billion pounds from 1.6 billion pounds a year earlier, compared with an average analyst estimate of 1.93 billion pounds. Net sales rose to 9.9 billion pounds, Diageo said.
The company increased its marketing spending by 8 percent to 15.5 percent of sales. Diageo took a “conscious decision to be investing significantly behind our brands,” Mahlan said, particularly behind emerging markets.
Sales and operating profit rose in all regions apart from Europe, the distiller said. Sales in North America rose 3 percent as consumers bought more spirits in the U.S., the world’s biggest market, including Ciroc vodka.
Diageo has a “strong balance sheet,” Mahlan said, enabling it to look for acquisition opportunities in emerging markets. It completed the $2.1 billion acquisition of Turkey’s Mey Alkollu Ickiler Sanayi & Ticaret AS yesterday, adding spirits including Yeni Raki. The company was in talks to buy Jose Cuervo, the world’s biggest tequila brand, from its family owners, three people with knowledge of the matter said in May.
“We’ve said before that Jose Cuervo is a great brand,” Mahlan said. “Should the owners choose to sell it, we’d certainly be interested in it.”
25 Aug. 2011