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.
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