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Global hop market

A 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 Russia

Germany 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 loses ground to rivals in packaged beer segment

FOSTER'S continued to surrender market share in the crucial packaged beer segment in the July quarter, a development that is likely to strengthen suitor SABMiller's hand in the $9.5 billion takeover battle between the two companies.
As Foster's robustly defended its reporting practices before the Takeovers Panel yesterday, figures from market researcher Neilsen showed that CUB's share of the local packaged beer market declined over the three months to the end of July.

016065-110906-b-foster-039-sThe brewer had 47.8 per cent of packaged beer sales by volume for the quarter, compared with 49.9 per cent for the same period a year earlier.

The decline was compounded by the fact that overall beer market volume fell by 6.8 per cent in the 12 months to the end of July, with the biggest declines in Carlton United Brewers' VB, Pure Blonde and Carlton Cold brands.

At the same time, rival brewer Lion increased its market share from 41.9 per cent to 43.1 per cent.

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Packaged beer accounts for about 70 per cent of the market, so SABMiller is likely to seize on the latest Neilsen data to strengthen the case for its bid.

Foster's, for its part, said at its annual result last month that its "total" market share had stabilised in the 2010-11 financial year, correcting long-term trends.

However, this included the draught as well as the packaged beer market.

In a Citi report last month, before the annual result, analyst Andy Bowley said CUB's market share had "dropped dramatically" in recent months.

Mr Bowley said the brewer's share, having progressed on a flat to slightly positive trajectory for 12 months until February, had since gone into steep decline.

"In part, the decline in share reflects a more positive company pricing approach since late 2010," he said.

"However, it also reflects more aggressive competitor pricing."

Foster's has emphatically rejected SABMiller's $4.90-a-share pitch, lodged last month.

While the board said the offer significantly undervalued the company, the brewer's share price remains below the offer, easing 1c yesterday to $4.85.

Meanwhile, the Takeovers Panel yesterday considered SABMiller's complaint that there was no reasonable basis for several forward-looking statements by Foster's in presentations to investors.

The bidder asked the panel to consider whether Foster's claims about growth prospects for earnings before interest and tax were misleading and deceptive in the context of a takeover bid.

It also questioned the group's reported net debt figure of $887 million, asking whether it conformed with Australian accounting standards.

The panel normally considers written submissions from both parties on such matters, with each side responding to the claims of the other.

If the matter is not dismissed in the early stages, the hearing normally proceeds for about a week.

The outcome of the panel's deliberations is subject to final approval by the corporate watchdog, the Australian Securities & Investments Commission.

5 Sep. 2011



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