The beer market dynamics in Russia is approaching zero, yet major brewers are divided into those who developed considerably in 2017 and those who considerably reduced their volumes. For instance, company Efes has managed to substantially extend their sales due to restrained pricing policy and activity in the modern trade. Heineken has also demonstrated an excellent performance promoted by significant increase of advertisement budgets launching a non-alcohol sort of the title brand and unusual activity in the economy market segment. Carlsberg and AB InBev have been focusing on margins and lost a market share of their inexpensive brands. Serious dependence on PET package and mass enthusiasm about Zhigulevskoe have negatively impacted the most of big regional brewers, that have been for the first time pressed by the leaders in the key sales channels, especially in Volga and Central regions. In the small business there has been a noticeable slowdown in appearing of new restaurant breweries, yet the number of craft breweries has been growing rapidly. In 2018, the beer market is likely to grow a little, while the share of AB InBev Efes may decrease due to the integration. ...
“Catalogue of Russian Beer Producers 2018” includes 1070 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft microbreweries.The catalogue includes 32 large breweries, 75 regional breweries, 693 industrial mini- and microbreweries as well as 270 restaurant breweries. ...
Global hop marketA 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 RussiaGermany 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.
Canadian craft brewers turn passion into profit
For more than half a century, the lion's share of the suds Canucks have poured back has come from two breweries: Labatt, founded in London, Ont., and now owned by Belgian mega-brewer Anheuser-Busch InBev; and Montreal-based Molson, the country's oldest brewery, which is now part of the Molson Coors Brewing Company. But in the 1980s, a number of independent craft brewers began setting up shop across the country with hopes of offering consumers an alternative to Canada's big breweries, a duopoly since the merger of Carling-O'Keefe and Molson in 1989.
Among those independent brewers was Peter McAuslan, who that same year founded the McAuslan Brewery in Montreal. Twenty years later, McAuslan Breweries has blossomed into a Canada-wide business with $20 million in beer sales from brands like St. Ambroise Pale Ale and St. Ambroise Apricot Wheat Ale.
He says instead of competing directly with the big brewers, it was always his intention to offer consumers something different. "Our whole plan was to never compete head-to-head with them. We would make beers that would appeal to an emerging consumer group that was interested in more flavourful, authentic, local products.
"So we always saw ourselves as being in a different beverage category than the beers made by the big brewers," he adds.
In Quebec, there are now upward of 70 craft breweries catering to an increasingly diverse client base. McAuslan says the choice for consumers has never been more robust.
"The emerging specialty beer consumers are much more numerous – there is a younger clientele than when we started," he said. "The beer landscape is totally different now than it was and consumer attitudes about beer have changed as well."
A key facet of any micro-brewery is its connection to the local community, something that Toronto-based Steam Whistle Brewing co-founder Cam Heaps says harkens back to the time when local breweries dotted the country and were synonymous with their communities.
What is craft brewing?
More of a marketing slogan than a brewing style, the term craft brewery was chosen to replace micro-brewery just as the segment began to grow six or seven years ago. According to Gary McMullen, chair of Ontario Craft Brewers, a craft brewery can be defined by its production volume. For the OCB, their cut-off is 400,000 hectolitres per year — but none of their members come close to that number. As a comparison, Molson produced 2.4 million hectolitres of beer in Canada in the last quarter alone.
"The breweries used to be located in the centre of [a town] and be active participants within those communities," he said.
Heaps comes from legendary Canadian brewing stock. His father, Frank, founded Toronto's first micro-brewery in 1985, the Upper Canada Brewing Company. The younger Heaps was working for Upper Canada when it was purchased in 1998 by Canada's third-largest brewer, Sleeman Breweries, itself since bought out by Japanese mega-brewery Sapporo.
He was fired from the company in the following year along with Greg Taylor and Greg Cromwell. The so-called "three fired guys" went on to found Steam Whistle in 1999, deciding to focus solely on brewing a beer in the European pilsner style.
"We chose the pilsner style, which is dominated by the oldest European breweries in the world," Heaps said. "If we're going to compete with that style, one of the most challenging in the world to perfect, we'd better just do one thing so we can be masters at it."
McAuslan says he attributes part of his success to maintaining an active connection with the thriving arts community in Montreal, sponsoring a number of art exhibitions and concerts.
"In the beginning we did a lot of small, supportive things for various arts and community groups," he said. "That helped us establish a reputation as good brewers and good members of the community, a position we still maintain – we just sponsored the free Arcade Fire concert at Pop Montreal in September."
He adds that the marketing strategy plays off the weaknesses of his larger competitors. "The big breweries have changed, becoming even larger and less locally focused which is good for small, local breweries."
Chipping away at a big rock
Gary Lohin, master brewer and co-owner of Central City Brewing Co. in Surrey B.C., says the Canadian brewing industry is unique because, as a small business offering a first-class product, he feels no pressure to compete with a huge multinational corporation like Molson Coors. His marketing approach is differentiation.
"I'm making such full-flavoured and full-bodied beers that the big breweries don't make," he said.
Lohin is responsible for the wildly popular line of Red Racer beers, which have been flying off shelves so swiftly that Central City is expanding its facilities to handle the increased demand. Indeed, the craft brewing industry in B.C. is the country's most thriving. Through March, craft beers accounted for 12.7 per cent of all beer sold in the province and sales have skyrocketed from $56 million in 2007 to $111 million in 2010.
Lohin says there remains immense room for further growth. "Nearly 90 per cent of people are still buying a case of big-brewery beer," he said. "We just have to keep innovating and offering the customers something they can't get from the big breweries, and we've so far been successful with that formula."
In Ontario, where craft beer represents six per cent of the province's total beer sales, the public's appetite for independent brews is growing despite the fact alcohol consumption on the whole is flat.
"Generally, people aren't drinking as much as they used to — per capita consumption is flat or down," said Gary McMullen, president of Muskoka Brewery and chair of Ontario Craft Brewers. "So if people are only looking to have one beer, they want something special to enjoy."
Heaps says the dominance of the big brewers has worked in Steam Whistle's favour.
"It's somewhat similar for any industry that's dominated by one or two major players – you know what you're getting into," he said. "Because their market share is so huge, you can just chip away a little piece and survive off it."
Big brewers taking notice
McAuslan says the growing challenge for small brewers is that the changes in the beer industry over the past two decades have led the big breweries to take an interest in what craft brewers are doing.
"They themselves are in the specialty beer business now, whereas 20 years ago they had no interest in doing that whatsoever," he said.
In May, Molson announced the creation of its new Six Pints Specialty Brewing Company. According to a press release, Molson's intention for the company is to "nurture and grow specialty and craft beer brands." Molson has been quite active in the craft brewing segment in recent years, purchasing Ontario brewer Creemore Springs in 2005 and Vancouver-based Granville Island Brewing in 2009.
Heaps says Molson's foray into the segment must mean the brewers are doing something right.
"I think it's great, because it's an open acknowledgement by them that the craft industry is legitimate and has something to offer that's different than what they offer," he said. "But I don't think the consumer likes opening the paper and seeing another craft brewery bought up.
"Ultimately, as the craft segment gets stronger, there will be more people who have the resources and ability to stay independent."
Peter McAuslan, who has seen it all in his two decades as a craft brewer, says in order for the segment to continue to thrive, brewers must do all they can to continually reinvigorate their businesses.
"We have a policy at the brewery to come out with at least one new beer each year, if we can," he said. "You've got to get out there and do new things in order to keep your key constituency interested in what you're doing.
"Between the small brewers and consumers, we've made this pact and we've changed the beer industry forever."
25 Oct. 2011