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.
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.
Russian market hammers Carlsberg
The drop, flagged in an August profit warning, comes as Russian efforts to tackle alcoholism led to a 30 per cent jump in the price drinkers pay for their beer over 18 months. That, combined with soaring input prices and intense competition, has created a toxic cocktail for the industry.
While this year saw a bigger Russian barley harvest, the quality was poor. Consumer sentiment in the region, meanwhile, remains weak. Russia contributes 40 per cent of group profits.
J?rgen Buhl Rasmussen, chief executive officer, anticipates a rebound in volume growth at some point next year, although he said it was “too early” to make any forecasts on any improvements in margin.
Overall, the Denmark-based brewer is sticking by its full-year guidance for a slight dip in reported operating profit to DKr10bn and 5-10 per cent growth in net profits.
Net revenue fell 2 per cent year-on-year in the third quarter to DKr17.4bn and the underlying growth was flat. Net sales in Asia, the smaller part of Carlsberg’s portfolio, were up 20 per cent in the quarter, while organic operating profit was up 18 per cent.
China, the biggest Asian markets in volume terms, is one of the world’s less profitable beer markets. In Northern and Western Europe, net revenues were down 2 per cent.
Michael Steib, analyst at Morgan Stanley, reckoned Russian margins would bounce back somewhat – not least due to the arithmetic of improving off a lower base – but expects most of this to be invested back in sales and marketing activity to revive growth.
Carlsberg is also losing market share in Russia, from over 40 per cent in 2009 to under 37 per cent this year. “That’s obviously a worrying trend and to a degree challenges the view that Baltika [Carlsberg’s Russian arm] is an unassailable fortress in Russia,” said Mr Steib.
Last month Carlsberg replaced Anton Artemiev as its head for eastern Europe with Isaac Sheps, who heads up the UK business for Carlsberg. The switch will take place on December 1.
Carlsberg, which has invested more than $12bn in Russia since the 1990s, has had a bruising year so far. In August it issued a profit warning that sent its shares tumbling 17 per cent on the day.
14 Nov. 2011