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.
A flat tax on alcohol could be a heady prospect for the new owners of Foster’s
A flat tax would simplify the tax system and change the economics of the entire industry. Put simply, a flat tax across the industry would slightly increase the price of beer sold in pubs and clubs, slightly reduce the price of bottled beer and dramatically reduce the price of spirits and alcopops. For wine companies it would have a profound impact. It would substantially lift the price of cheap wine and reduce the price of premium wine.
Right now there are more than 13 different alcohol taxes at play, many of which are antiquated, and some that are at odds with the government's health and social policies.
Advertisement: Story continues below A flat tax would be watched with interest by SABMiller, particularly the spirits business. Even before it has taken control of Foster's it has taken the first steps to lifting morale in the company and it is looking at the best way to improve the economics of the company's beer production.
The day after the Foster's board agreed to the renewed $12.3 billion takeover offer for the country's biggest beer company, SABMiller is understood to have given staff the afternoon off as a symbol of goodwill and a portent of positive things to come. SABMiller is also believed to be looking at how deeply it can take the knife to head office at Southbank, which is carrying a lot of fat and has been the subject of criticism over the years from its team in Sydney. And in terms of improving efficiencies the talk is that it will scale up the Bluetongue Brewery in NSW, which was previously a joint venture between SABMiller and Coca-Cola Amatil, close the brewery in Abbotsford, Victoria, which is old, inefficient and land locked, open up a small brewing establishment in country Victoria, where it would get tax concessions, and sell the Foster's Fijian distillery to Coca-Cola Amatil. All of this would reduce the company's cost per hectolitre of beer.
Bank of America/Merrill Lynch analyst David Errington co-authored a report on June 27 which looked at the cost of beer globally. The report found Foster's had the highest cost of production in the world. It estimated Foster's total cost of beer per hectolitre was $163, compared with $148 for Lion Nathan, $75 for SABMiller Europe and $73 for SABMiller in South Africa.
The Abbotsford brewery is one of the reasons why Foster's cost of production is so high. According to Errington, if the Abbotsford brewery was closed and a new one built, Foster's earnings before interest and tax could rise by at least $100 million to $150 million a year.
If politics didn't come into play and the tax was extended to wine, it would make the country's listed wine company Treasury Wine Estate look cheap. The Treasurer, Wayne Swan, has come out saying the government would not change alcohol tax on wine ''in the middle of a wine glut'' but it is only a matter of time before governments realise the tax system exacerbates the glut by encouraging production on the basis of volume as opposed to value.
Beer, spirits and ready-to-drink products, also known as alcopops, are taxed on the basis of their alcohol content, with spirits and alcopops taxed at a higher rate because of the perceived greater risk of abuse. Wine is the big anomaly. It is taxed on price rather than volume. This means low-value cask wine attracts little taxation while more expensive bottled wine attracts higher tax under the wine equalisation tax system. Various studies have been conducted over the years to estimate the impact of a flat tax.
One report, prepared for the Henry tax review, estimated that a flat tax would result in the price of a $35 bottle of spirits falling to $22.45, a bottle of alcopops would fall from $3.30 to $2.42, a $14 wine cask would jump to $31.07, an $8 bottle of wine would increase to $10, a $13 bottle of wine would rise to $13.87, an $18 bottle of wine would fall slightly and a $30 bottle of wine would dip to $27.53.
In terms of draught beer, the study found that a pot of light beer would go up 36?, a pot of mid-strength beer would rise 29?, full-strength beer would go up 23?, and packaged beer would be virtually unchanged. Such a move would have profound implications for the wine industry, which remains under serious pressure with systemic global oversupply, a high currency, drought and bad weather, and the effect of the slowdown on global demand.
It would decimate the cask wine market, which represents about half of all wine sold. And it would decimate winegrowers in the Riverina, Griffith and the Riverland. Treasury Wine Estate specialises in premium wine and so it would do wonders for its bottom line.
Regardless, any changes to alcohol tax are politically and practically challenging. The debate is complex and many in the industry believe it would be too politically damaging to introduce a simple taxation system taxing all alcohol in the same way.
3 Oct. 2011