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.
Buying a business in Romania: cultural due diligence and hidden cultural rules
“This transaction allows us to consolidate our leading position in Romania. We have a stronger portfolio , more diversified with leading brands and an excellent platform through which we will bring the value and development,” said at the time Nico Nusmeier, Regional President of Heineken for Central and Eastern Europe.
The beer maker in Romania was 90 percent controlled by five players – Ursus Breweries, Heineken, Bergenbier, Tuborg and Romaqua, while small producers accounted for only 10 percent of the market.
What was the reasoning behind the Heineken – Bere Mures deal? The two main players were forced to play the game of market leaders, as an alternative to organic growth, and any strategic movement like M&A was a key determinant in their market positioning. The particular case of Bere-Mures acquisition was not necessarily a desired acquisition, but rather a reactive movement to the market tendencies.
In their turn, the Bere-Mures shareholders sold the company simply because it was the best moment of exiting the market.
On the other hand, the main players Ursus and Heineken, fighting for the first position, were forced to get involved in the process and make a decision. At the moment of the acquisition the market share difference between Heineken and its main competitor SAB Miller was only 1 percentage point, thus the fight of getting Bere-Mures that accounted for 6 percent of the market was very tight with both players negotiating in parallel with Bere-Mures. The improvement in competitive position is one of the main drivers of M&A transactions and this was also one of the main reasons behind the Bere-Mures acquisition.
During the process the two companies used a system called Total Product Management, which is very similar with Six Sigma concept, where Six Sigma can deal with a cultural change as well. “It was necessary to align all the processes of Bere-Mures with those of Heineken Romania,” said Vasile Ciurba, Member of the Board of Directors of Bere Mures.
Another aspect that was considered important was “the leadership style of the Romanian management of Bere-Mures, which was a direct leadership style, the decisions were taken much faster compared to Heineken Romania”. Two different national cultures – collectivist and individualistic ones, were merged into a new organizational culture through successful leadership.
There are various obstacles for international mergers and acquisitions and these can have a tremendous impact on the international workforce and global business operations if not addressed in the early stages.
Obstacles for international M&As in the cultural field include:
?attitudes and behaviour between the home and the host culture which can cause misunderstandings,
?client and employee dissatisfaction.
16 Nov. 2011