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.
Analysis: Brewing jobs in front line of euro debt crisis
The downturn in 2008 heralded a three-year cost-cutting exercise at Amsterdam-based Heineken and a number of brewery closures at Carlsberg.
Analysts say another round of bloodletting is on the cards.
Both brewers are threatened by the euro zone crisis -- Heineken earns 35 percent of its profit from western Europe and Carlsberg as much as half, with the Dutch brewer more exposed to euro zone economies on the critical list.
Brewers' profits have already been battered by the crisis in Greece and Iberia and analysts worry Italy and France might be next, while, outside the euro zone, Britain's beer market may suffer from national austerity measures aimed at cutting debt.
Germany is western Europe's biggest beer market in a $29 billion industry with around one third of the volume, followed by Britain, Spain, France, Italy and then the smaller markets of the Netherlands, Belgium and Denmark.
Heineken is coming to the end of its cost-cutting program, and analysts have said the next round, to be outlined in February, may have to go deeper, while Copenhagen-based Carlsberg has said it will look at overall costs.
Chief executive Jorgen Buhl Rasmussen told Reuters this week Carlsberg was preparing for the worst conceivable situation and looking back to its experience in 2008. It was important to act fast and ahead of the field, he said.
"For that reason, we are right now looking at our entire cost base to see if all activities are necessary and if any could perhaps be postponed for a period of time," he said.
Analysts said brewery closure will be more difficult after a number of recent shutdowns -- Carlsberg is operating in a number of countries with just one brewery. But, if trading is hit by the euro zone crisis, brewers may have no option.
"If the top line looks a bit gloomy and pricing in Europe is not fantastic, you need to adjust the cost base," Bernstein Research analyst Jean-Marc Chow said.
In 2008, Carlsberg decided to focus its Danish and Italian businesses on just one brewery each, with the closure of Valby and Ceccano. It also decided to close its Loule brewery in Portugal and Tetley brewery in Leeds, northern England.
Heineken's three-year 2009-11 Total Cost Management cut 435 million euros ($588 million) off costs in the first two years, with just over half the cuts in western Europe, and was still cutting costs this year.
Last year, Heineken closed two breweries in England, at Dunston in the northeast and Reading in the south, following its 2008 takeover of Britain's biggest brewer Scottish & Newcastle in a year when the beer market fell 4 percent.
A Heineken spokesman said his group is very focused on productivity and cost savings and has cut costs by over one billion euros since 2006, and it will continue these cost cuts with the launch of its new TCM2 program in 2012.
Heineken and Carlsberg, ranked No. 3 and No. 4 in the world, are more exposed to western Europe than the world's two biggest brewers -- Anheuser Busch InBev and SABMiller, which earn just 8 percent and 2 percent, respectively, there.
Carlsberg, which also brews Baltika, Kronenbourg and Tuborg, is the No. 1 brewer in France and No. 4 in Italy but makes most of its regional profit further north in Scandinavia, Germany and Britain.
Heineken, which also brews Amstel, Birra Moretti and Cruzcampo, is the most exposed of the big brewers to the euro zone crisis being No. 1 in Greece, Italy and Portugal and No. 2 in France, Ireland and Spain.
Societe Generale analyst Andrew Holland said brewers were finding it very difficult to increase beer volumes and push prices higher in Greece and Ireland, and the tough trading conditions could easily spread.
"The Italian market could be the next to suffer a consumer downturn. Austerity has yet to bite. From the experience of Greece, people stop spending a bit after the announcement of measures and then you get a second downturn when they actually find they have less money."
18 Nov. 2011