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.
SABMiller announces US$260 million investment in Africa to fund capacity increases
SABMiller Africa's impressive growth trajectory continued in the first half of the year to 30 September 2011, with volumes up 15 per cent. SABMiller's growth in the region has been driven by continued investment in diverse product portfolios, enhanced distribution and consumer occasion activations. Beer has grown category share from a low base of per capita consumption, supported by a buoyant economic environment.
SABMiller Africa has seen growth of 34% in Castle premium beers (Castle Lager, Castle Lite and Castle Milk Stout). At the other end of the price spectrum, the company has introduced and expanded the reach of a range of affordable traditional and locally-sourced beers including Eagle sorghum beer, Chibuku opaque beer and Impala cassava beer.
This combination of strong underlying economic fundamentals and a full range of products at all price points has driven increased consumer demand for beer, particularly in Uganda, Zambia, Ghana and Tanzania.
Nile Breweries Ltd, Uganda (NBL)
In the six months to 30 September 2011, volumes grew by 23% in the Ugandan business. The second quarter saw double digit growth in economy, mainstream, and worthmore segments, despite capacity restraints. SABMiller's African division plans a US$70m investment in the business, and is currently considering the most effective way to increase capacity.
Accra Brewery Ltd, Ghana (ABL)
Lager volumes grow by 54% in the first half of the financial year. ABL's Club Premium Lager led this strong performance, with volumes growing by more than 80% in the second quarter alone in the fastest growing market in the region. ABL will receive approximately US$40m to support further capacity expansion in a fast growing market.
Zambian Breweries Ltd, Zambia (ZBL)
In Zambia, lager volumes grew 22% on the prior year as a result of increasing demand for the Castle and Mosi Gold lager brands. This growth has seen ZBL approaching its current capacity limits in a buoyant economy. To remedy this, US$70m will be invested in the business to support further capacity upgrades in the coming years, including the expansion of the Ndola brewery.
Tanzania Breweries Ltd (TBL)
Tanzania gained market share and delivered robust volume growth of 20% in the first half of the year, due in part to increased refrigeration at point of sale, a more focused distribution model and a favourable economy. Key brands, including Safari, Kilimanjaro, Castle Lager, Castle Lite and Grand Malt are all in growth and trending upward. Approximately US$80m will be invested in capacity expansions at TBL's breweries in Arusha, Mwanza and Mbeya.
Mark Bowman, managing director of SABMiller Africa, comments: "The positive economic backdrop in Africa, very favourable demographics and current low levels of consumption underpin our confidence in making additional investment to meet the strong demand for our products in the region.
"This investment is in addition to the US$1.5bn that we have already invested in Africa in the past five years and our continued development of affordable products such as a cassava-based beer will allow us to continue to drive growth in the business and in the communities in which we operate."
17 Nov. 2011