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.
Big beer merger excites investors, not analysts
As some of the season's last baseball games play out in stadiums named Busch and Miller, Wall Street is buzzing about a different kind of match between the two beer brands.
For the past couple of weeks, rumors have been swirling about a possible combination of the world's No. 1 and No. 2 brewers, Anheuser-Busch InBev and SABMiller. The merger speculation has popped up before, and the latest gossip doesn't add anything new except a potential price tag: $80 billion.
Still, investors seem to want the rumors to be true. SABMiller shares jumped 7 percent in London trading on Oct. 6, the day a Brazilian website published a report about the potential deal.
The rumors seem plausible for several reasons. Anheuser-Busch InBev's biggest shareholders came from the investment banking business, and they have built the world's largest brewer through a series of opportunistic mergers. It has been three years since they bought St. Louis-based Anheuser-Busch, so perhaps they're hungry for another deal.
Then there are the savings to be had. Mike Gibbs, an analyst at JPMorgan, estimates that the sharp-penciled folks at A-B InBev could squeeze $1.3 billion out of the combined companies' cost structure.
Plus, beer sales have been stagnant in the U.S. and Europe, where A-B InBev does the bulk of its business. Why not buy some growth, along with exposure to Africa, where SABMiller has a leading position?
A deal would face significant hurdles, starting with the U.S. Justice Department. A-B InBev and MillerCoors (a joint venture that is majority-owned by SABMiller) sell more than three-quarters of all beer consumed in this country.
Analysts presume that MolsonCoors, the other joint venture partner, could buy all of MillerCoors. But agreeing on a price might be difficult, and Gibbs says MolsonCoors might have difficulty financing its part of the deal. The joint venture agreement bars either party from selling before December 2012.
China also would probably raise antitrust concerns, analysts say.
For A-B InBev, a mega-acquisition would represent a sudden about-face in strategy. It has paid down nearly half of its debt load from the Anheuser-Busch acquisition, and management has been "vocal about focusing on organic growth," says Gimme Credit analyst Dave Novosel.
"It's highly unlikely, in my opinion, that this deal goes through," Novosel said.
Tom Pirko, managing director of consulting firm Bevmark, is also skeptical about the deal rumors.
The companies' cultures are very different, and Pirko says he thinks A-B InBev would have difficulty imposing its tough-on-costs culture on SABMiller. "It's a Latin American mentality versus a South African mentality, and those two wouldn't mix very well," he says.
Pirko thinks Wall Street may be a little too eager to see a big merger and the big fees that go with it. He doesn't deny, though, that the beer industry is in a consolidation phase. "One thing the analysts have right is there's a tremendous drive right now, like a sex drive, for consolidation and mergers," Pirko said.
Combining the two industry giants, though, might be a merger too far. "I can pencil this out and come up with the same valuation numbers," Pirko said, "but it's a deal I would have great trepidation about. I'm not sure the synergies are as easily available as some people think.
"Coke and Pepsi shouldn't merge, and these companies should think of themselves as the Coke and Pepsi of the beer business," Pirko adds. "It's about beating your competition, but also about being sharpened by them. The more you compete against each other, the stronger you both become."
17 Oct. 2011