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.
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.
Independence Brewing Co. tugs Texas beer market
Their venture, Independence Brewing Co. .Independence Brewing Co. Latest from The Business Journals Beer brewer bottles success Microbrewers lobby state to sell beer directly to consumers'Horns drunk on power, a 9-year-old Follow this company ., has grown to nearly $1.1 million in sales with a profit margin of 11.4 percent, and its production will soon reach capacity. And while they will need to move to increase production, the Cartwrights find themselves more able to meet a daunting new challenge, having learned many lessons while overcoming seven years of entrepreneurial hurdles, including obtaining funding, finding a niche, ramping up production and staff, optimizing distribution and building a brand identity.
Underpinning all those obstacles and influences was a common element of entrepreneur success: “Then, it was just dogged pursuit and perseverance,” Amy Cartwright said.
Before anything could happen, they had to secure startup funding. A year was spent seeking an unforthcoming Small Business Administration .Small Business Administration Latest from The Business Journals Titan Bank weighs DFW branchBB&T ranks as top SBA lender in North Carolina in October SBA lending in Hawaii reaches record level Follow this company .loan. So the founders raised $250,000 through private sales of shares.
Having sufficient capital and credit — although at times, barely enough — has been crucial for Independence, particularly in dealing with tasks that invariably turn out to be more difficult and expensive than expected. For example, much of the company’s financial safety net was expended paying rent on its brewing location while a permitting delay held up the start of production. It would have helped to raise more working capital, Amy Cartwright said.
Also, starting its bottling operation required $100,000 and was made more challenging because suppliers provided no terms, instead requiring the new customer to pay in advance.
“You’ve literally got to shell out for everything before you see a dollar,” Rob Cartwright said. “The capital requirements of continued growth are tough.”
Identifying a market
One thing Independence hasn’t been able to do because of state law is sell on-site — as many out-of-state brewers can — as a means to test beers with consumers and generate immediate revenue. As a result, the Cartwrights and their company had to commit and were “thrown into the meat grinder,” Rob Cartwright said.
The Cartwrights determined that the craft beer market featured very little brown ale, and they’ve been able to gain traction by filling a void, Amy Cartwright said.
They identified the top 20 local restaurants and bars they wanted to sell to, visited them one by one and convinced them to stock their beer. They also sought exposure by donating beer to community events.
The next wave of growth came during the second year as they began bottling their beer, in addition to selling kegs, bringing their product to grocery stores and neighborhood markets. That was big in that about 95 percent of consumer spending on beer in Texas — compared with about 90 percent in the rest of the country — is in packaged beer, Rob Cartwright said.
Between the second and fifth years, the next milestone was hiring a full-time staff, while the Cartwrights refrained from drawing salaries to ensure they could pay their workers. The company now has 11 employees, besides the founders. A crucial addition was a dedicated sales person.
“Having somebody really focused on your sales effort was really key,” Amy Cartwright said. That addition, she said, contributed to the company’s first major break in its fifth year, when production, sales and profitability came together.
Brand building through creativity
Typically, a microbrewer will enlist a distributor to increase sales outside the brewer’s local market, but Independence flipped that model around, using a distributor in the local market while retaining distribution beyond it, Rob Cartwright said. The rationale, he explained, is that a market not yet developed is worth less to a distributor. So in Houston, where the company recently expanded, Independence is doing the initial leg work to develop the brand, whereas it considered the brand strong enough in Austin to hand over distribution.
A big part of building its brand is connecting the company’s beers with the story of independence, Amy Cartwright said, which, in turn, gives the company’s employees a concept they can focus on.
Meanwhile, staying competitive in craft beer requires more than business skills, Rob Cartwright said.
“The market now is extraordinarily demanding of continued creativity,” he said. “What is a good India Pale Ale 12 months ago is now commonplace. The bar is constantly moving up.”
With 27 million people, Texas has a burgeoning craft beer market, in which Independence’s production grew by 76 percent last year. And behind the numbers are intangibles further spurring the growth of craft beers like Independence’s, such as “an adverse reaction to commercialization,” Amy Cartwright said.
Michael Portman, co-founder of Birds Barbershop .Birds Barbershop Latest from The Business Journals Birds Barbershop set to open 5th store in Hyde ParkBirds Barbershop opening Hyde Park location — blogBirds Barbershop broadens business model Follow this company ., attests to the value of local, having launched a co-branding partnership with Shiner-based Spoetzel Brewery in July. Besides being “able to work with a really pro team that’s right here in town,” he finds a benefit to being associated with local and Texas brands.
“As a Texan, you just root for [Shiner]; it’s like rooting for the Cowboys or the Astros,” he said. “It’s an intangible Texan thing.”
While also benefiting from such Texas intangibles, Independence is focused on the numbers, aiming to attract further investors to enable a 2012 move to a new and bigger brewing site — the next stage in the Cartwrights’ 10-year plan.
“I never expected it to be easy,” Rob said. “But I never fully understood the depth of the hardness.”
29 Nov. 2011