10+1 trends of Russian beer market 2015-2017Despite of the moderately negative prognoses for 2017, the beer market can be stabilized soon. Yet the years of the negative dynamics have resulted in marketing being limited just to “optimization” and the art of balancing between price and volumes. Bigger supermarkets share means stronger trade marketing. These processes are connected to the majority of the described trends. At the same time, the federal brands inflation leads to searching for new tastes, sales channels and contact formats that expand the product range and diversify the beer market, but do not imply a substantial volume increase. Let us enumerate and further discuss the ten trends of the beer market we can see in 2015-2017 as well as the major event of 2017.
Beer market of Ukraine 2017In the first half of 2017, the Ukrainian beer market goes on decreasing slowly. Yet, the companies manage to compensate their lost volumes by raising prices and improving the sales structures. This results in the mid price market segment reduction while the sales of premium brands are rising. These processes are connected to position strengthening of companies Carlsberg Group and Oasis and the market share reduction of Obolon. Most of the novelties by the market leaders belong to craft or hard lemon categories.
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.
CR Snow Breweries Bids for Houli Beer; Eyes Guangdong Market
The bid for the Shaoguan-headquartered brand comes 6 months after CR Snow Breweries lost out on a 21.37% stake in another local brewer, Kingway Brewery Holdings Ltd., to Belgium’s Anheuser-Busch InBev NV.
“We lost the bid for Kingway, but that doesn’t mean the end of our acquisition drive, which is core to our strategy of gaining market share first, even if that means profitability has to come later,” Zhao Xifang, general manager of CR Snow Breweries’ Guangdong branch, told the Southern Metropolis Daily.
Huoli Beer has a production capacity of 150,000 tons per annum and distributes Huoli-branded beer products in Guangdong, as well as neighboring Jiangxi and Hunan provinces.
“After being incorporated into the CR Snow Breweries family, Huoli Beer is expected to face a better future in the Pearl River Delta market, and with its geographical advantage in Shaoguan, it would also help CR Snow Breweries to entrench its position in the Hunan and Jiangxi markets,” Zhou Maohui, secretary general of the Guangdong Provincial Alcohol Industry Association, told the Southern Metropolis Daily.
Huoli Beer has all but halted production and is going through the process of bankruptcy, after which its assets will be auctioned off, according to Zhao.
CR Snow Breweries hasn’t the disclosed financial details of the deal, but Zhao said money is of little concern for the brewer, which is a joint venture between London-based SABMiller Plc. and China Resources Enterprise Ltd. (2319.HK).
CR Snow Breweries is looking to boost its presence and production capabilities in Guangdong, where it has only 1 plant compared to the 3 run by its biggest domestic rival Tsingtao Brewery Co. Ltd. (600600.SH), which have a combined annual output of more than 1 million tons from Guangdong.
The current plant’s 400,000 ton annual production capacity is far from enough to ease the brewer’s production pressures, according to Zhao.
“Our parent China Resources Group signed an agreement with the Guangdong Provincial Government at the beginning of the year to invest RMB 10 million in the province, and investments in the beer sector are part of that [agreement],” Zhao said.
“Under that backdrop we are going to seize opportunities in the market; that could mean both mergers and acquisitions and the establishment of new production plants,” Zhao said.
Shenzhen-based CR Snow Breweries is slowly shifting its focus from more mature markets in East China to growth opportunities in south and southwestern China. Last month the company inked a deal to buy a 70% stake in Moutai Beer for RMB 270 million.
Moutai Beer is a brand under liquor producer Kweichow Moutai Co. Ltd. (600519.SH), located in southwestern China’s Guizhou province.
“Beijing, Shanghai, Guangzhou and Shenzhen are the 4 most important cities in China, and for us that means we must have a solid foothold there to match our position as the country’s largest beer producer,” Zhao said, hinting that Guangdong’s capital Guangzhou would be the brewer’s next target.
Local brand Pearl River Beer currently has a dominant 46% market share in Guangzhou, followed by Tsingtao Brewery with 15% and AB-InBev’s 10%, according to data provided by private information house Societ Insights & Decision.
6 Sep. 2011