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.
AB InBev Is Tasty for Investors
The reason for the relatively solid share price performance of AB InBev or peers like Heineken is rather that consumers drink more alcohol in the crisis. In fact waning consumer confidence weighs on the industry results in mature markets.
But brewers have been forced much earlier than other industries to widen their global footprint to balance out revenue streams. Still, for AB InBev the U.S. is the largest market, with volume growth most notably is in Brazil and China, which almost offsets volume declines in the U.S. and Europe.
AB InBev’s shares have lost just roughly 4% of their value so far this year, making it one of the top-five performers in Brussels benchmark index Bel 20, which has lost almost 20% so far this year. Peer Heineken shows a similar performance with a year-to-date decrease of 6.5%, compared to a 16.7% decline of benchmark index AEX, despite both brewers having a significant exposure to mature markets like North America and Europe.
Analysts at KBC Securities said:
“Although low organic growth and the declining rate of cost synergies make it hard to find a short term trigger, the defensive earnings character, beer category leadership with strong market positions in some of the world’s largest beer profit pools [like the U.S. and Brazil] with also significant pricing power prompt us to reiterate our accumulate rating with a €47 target price.”
14 Nov. 2011