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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.

SABMiller announces US$295 million investment programme in Peru

SABMiller plc [SAB:LSE/SAB:JNB] announces a US$295 million capital investment programme in its Peruvian subsidiary, Backus. Released over a three year period, the funds will be used to increase capacity in the business' breweries in Ucayali, Cusco, Lambayeque, Lima and Arequipa. It will also support investment in vehicles, glass bottles and other essential equipment to support future expansion.

Backus is one of the most significant contributors to the Peruvian economy, collecting approximately US$760 million in direct and indirect in taxes in 2010, and employing 7,000 people directly and 22,000 indirectly across the country. The geographical spread of the investment across a number of regions will ensure that many local communities will benefit from job creation and investment in the value chain.

Luis Eduardo Garcia Rosell, interim Backus President, comments: "Peru has seen strong growth in recent years and economic forecasts remain positive, with average annual GDP growth of 3.3% predicted until 20201. We believe that continued investment in our operational capacity, in addition to the attractiveness of our brand portfolio and the beer category as a whole, will allow Backus to continue to capitalise on this impressive upward growth trajectory.

"However, it isn't just the company's shareholders that will benefit from our capital investment programme. For every person it directly employs, Backus already supports three Peruvian jobs in the value chain. This further investment demonstrates our continued commitment to local communities, supporting jobs and businesses across the country and promoting economic growth and wealth creation for the benefit of all."

Peru remains an attractive market with strong underlying economic indicators. In addition to positive GDP growth forecasts for the next ten years, the population is predicted to grow by 53% between 2000 and 21002. Beer consumption in Peru is currently more than 11m hectolitres per annum, and could rise to as much as 16m hectolitres by 20203. Per capita consumption stood at 38.2 litres per annum in 2010, which is significantly below consumption rates in Brazil (65.4 litres), Venezuela (77.8 litres) and the USA (79.8 litres).

SABMiller has invested approximately US$570 million in Backus in the past five years, supporting its continued growth and development. Today, the company is the second largest contributor to the Latin American division of SABMiller, which provides approximately a third of the group's EBITA. Backus' strong performance has continued in the first half of the current year, with beer volumes in the six months to 30 September 2011 up 11% on the prior period.

17 Nov. 2011



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