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4-2017

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.

ABInbev may use AmBev shares to buy SABMiller

A brazilian magazin published the speculation of Analyst William Barros, that the high market value of the Brazilian market leader would provide an advantageous exchange ratio of shares, when buying or merging with British-African SABMiller Group. That is, because AmBev is much more valued at the Sao Paulo stock exchange, than the actual ABInbev, whose shares are traded in Europe. The high market value of Brazilian brewery would enable a relationship of friendly exchange of shares with SABMiller, whose shares are traded on the London Stock Exchange.
The market value of AmBev is currently around USD 83 billion, being about the market value of mother company AB InBev, which is traded on the Belgian stock exchange for about USD 85 billion. SABMiller is worth 33.4 billion pounds, or USD 51.4 billion. Ambev may also use USD 3.2 billion USD cash in the operation.
While AmBev’s shares trade at 18.6 times estimated profit for 2012, SABMiller shares equivalent to 13 times the expected result for the year. This would give an advantage to the Brazilian company in the negotiations.
One analyst believes, that the acquisition of SABMiller by ABInbev makes “perfect sense”, because the two breweries are complementary. There is only overlapping business in the U.S. and China. Antitrust authorities in these countries may impose restrictions, but that should not disable the operation as a whole .
This year, AmBev has become the darling of the market and is among the best performing roles in the Bovespa. Investors believe that the brewery is an active “defensive” in times of uncertainty. The price of beer keeps pace with inflation, even with a slowing economy, people do not stop consuming it.
This strong demand for shares of AmBev, however, created distortions in the market, which explains the fact that the brazilian brewery is worth as much as its Belgian parent company.
12 Oct. 2011

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