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.
Business takes a critical look at climat change challenge
SAB believes that while COP17 is an important dialogue, policy makers should focus on adaption to climate change. "In many parts of the world, the impact of climate change is already visible. Responsible and proactive companies must therefore be thinking about how to adapt to these climate impacts. In South Africa, water scarcity is one of the most critical impacts," says Andre Fourie, SAB Head Sustainable Development.
Water as an area of climate adaption in the Southern African region and key actions required to develop an integrated and shared approach to water resource management, will headline a session titled: Business response to climate variability in Southern Africa: focus on adaption and water stewardship by leading corporations; co-hosted by SAB, WWF and Nedbank, on Thursday, 1 December 2011.
SAB will contribute its experience and work, in particular around water management, to the session, and hopes to gain further from the key learnings of other corporations prioritising the mitigation of and adaption to climate change.
SAB has opted for a holistic approach to climate change, which recognises both mitigation and adaption interventions. "We understand that while it is important to eliminate and reduce the causes of climate change, it is also equally important to reduce vulnerability and increase resilience to the inevitable impacts through adaption, in particular the threat of water scarcity," says Andre Fourie, SAB Head Sustainable Development.
SAB sees sustainability as fundamental to business success and two of the organisation's ten sustainable development priorities relating directly to climate change and adaption. These are: Reducing energy and carbon footprint and Making more beer using less water. "Aside from its broader economic and societal impacts, climate change could directly affect many aspects of SAB's business in the coming years, including the availability of water and crops - essential inputs in the brewing process," says Fourie.
The company's climate change strategy goes beyond energy efficiency and switching to renewable energy sources. It focuses on how SAB can help to reduce greenhouse gas emissions across the entire value chain in relation to packaging, manufacturing, transport and refrigeration.
In terms of reducing energy and carbon footprints, SAB has made a commitment to:
- Minimise the impact of energy constraints on operations, customers and consumers through practical, proactive and strategic interventions
- Meeting Eskom and government's reduction targets within the set timeframes and where possible, exceeding the minimum required savings
- Educating and empowering people to become energy-conserving champions
- Adopting energy saving measures and reporting savings achieved transparently and timeously
- Ensuring that energy saving initiatives are in line with existing sustainable development objectives
SAB recently announced that it had reduced its annual electricity consumption throughout its breweries by a total of 17%, well above the initial targeted electricity reduction of 10%.
SAB's reduced consumption equates to just over 1%, or approximately 115 million kilowatt hours, of Eskom's total required savings of 9 Terawatt hours. The company is now working towards a global SABMiller target to build onto its electricity consumption achievement and is aiming to reduce carbon emissions from onsite energy use by 50% per hectolitre of beer by 2020.
SAB also proactively engages with relevant authorities on a regional and national basis to reduce the impact of electricity consumption on the business.
Because climate change will have an impact on the availability of water, SAB consistently reengineers the business to be water efficient as a climate adaption effort.
The company is one of the first to undertake a comprehensive water footprinting exercise, which revealed that more than 90% of the water footprint of a bottle of beer is found in the agricultural supply chain. SAB therefore works with farmers who supply the company with barley and hops on initiatives to help reduce water usage. SAB is working with the WWF and GIZ (the German technical company) in the Water Futures Partnership, focusing on the George area which is both under water pressure and the only part of the country where hops is grown commercially.
SAB's water strategy is based on 5 R's - pRotect, Reduce, Reuse, Recycle and in the value chain. The strategy focuses on four key areas:
In the brewery - using less water to make more beer and manage effluent standards
In the supply chain - working with suppliers and farmers to identify water risks and options to reduce water use across the supply chain
In communities - identifying community projects that will help provide safe and sustainable drinking water to communities
Water governance - keeping water on SAB's strategic and risk agenda, mobilizing employees to save water, engaging with government on policy issues and delivering on the Water Futures Partnership
Good progress has already been made with SAB having improved its water efficiency by 8% over the past two years to an average of 4.1 litres of water per litre of beer produced. Work is being done to reduce this further by approximately 13% to 3.6 by 2015.
Long term water assessments of all its breweries have been undertaken and SAB has a comprehensive understanding of the risks it faces over the next ten years.
29 Nov. 2011