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4-2017

Global hop market

A 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 Russia

Germany 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.

China Resources says Q3 profit falls, beer sales up

* Beer division sales up 19.3 pct in Q3
* Retail sales rise 27 pct, same-store sales up 11.6 pct
* Says consumer sentiment hit by global economic woes

By Donny Kwok

China Resources Enterprise Ltd, the country's biggest supermarket operator and top beer maker, on Thursday posted an 18.4 percent drop in third-quarter profit amid rising costs.

"Uncertainties surrounding the global economy have affected consumer sentiment in China, which in turn has put pressure on the group's consumer goods business in the near term," said Chairman Qiao Shibo in a statement.

"We are optimistic about the long-term development of China's retail market," Qiao added.

The company, which produces China's top beer brand Snow with one of the world's largest brewers SABMiller Plc, said profit for the third quarter fell to HK$863 million ($110.9 million), from HK$1.06 billion profit a year earlier.

Along with the urban maintenance and construction tax and education surcharges imposed on foreign enterprises since the end of 2010, an increase in labour costs and an acceleration of retail network expansion had affected earnings, it said.

Profit from the retail division plunged 39.7 percent during the quarter, while food dropped 32.2 percent, and beverages fell 26.2 percent. The beer division posted a 1.5 percent gain.

In August, China Resources Enterprise had said cost pressures would continue to rise for the remainder of the year, but its profit margin should remain at the same level as the first half.

"We will also continue to seek investment opportunities in a prudent manner to further expand our business and move closer to our goal of becoming the largest consumer goods company in China," Qiao said, adding that the company would enhance profitability through organic growth.

The conglomerate said revenue for the quarter rose to HK$30.8 billion from HK$24.45 billion a year earlier. Sales from its retail division rose 27 percent to HK$17.67 billion.

Sales from the beer division were up 19.3 percent at HK$9.27 billion. The food business jumped 35.9 percent to HK$2.88 billion, and beverages climbed 45.4 percent to HK$1.1 billion.

NINE-MONTH BEER SALES UP 24 PCT

The company said beer sales for the first nine months of 2011 rose 24.1 percent to HK$22.1 billion, while profit rose 10.1 percent to HK$863 million.

The company, which operates about 80 breweries in China, said it would strengthen cooperation with suppliers and reinforce its centralised purchasing system to stabilise raw material costs.

On the retail front, China Resources, which operates more than 3,800 stores in China and more than 77 percent self-operated, said same-stores sales rose 11.6 percent during the quarter but the business was facing pressure from rising wages and taxes.

Shares of the company were down 1.15 percent at the midday trading break on Thursday before the results, against a 0.88 percent fall in the Hang Seng Index.

17 Nov. 2011

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