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 steps up market share war with EABL
It is targeting the premium end of the local beer market with its US brand Miller Genuine Draft, which will be sourced from its Tanzania’s brewing plant. This segment is currently served with rival beers Heineken and Tusker Malt.
The London-listed firm’s entry will open a new battlefront between Diageo through EABL and SABMiller via its local subsidiary Crown Beverages.
“We are launching on December 8 at the Lady Lori, Wilson Airport and our target is the high margin premium market,” said a source at Crown Beverages who sought anonymity.
The new beer is owned by US-based brewer MillerCoors, which is 58 per cent owned by SABMiller, but is brewed by Tanzania Breweries Limited.
SABMiller has been distributing two brands— Redds and Castle Lager sourced from Tanzania through Crown Beverages —which it bought late last year after taking control of family-owned Crown Foods, the bottlers of Keringet drinking water.
The addition of a third brand to its stable signals the firm’s eagerness to gain a foothold in Kenya months after it officially ended a distribution agreement with EABL
SAB Kenyan subsidiary Castle Brewing shut down in 2002, forcing them to enter an uneasy distribution agreement with EABL after the SABMiller predecessor bought 20 per cent stake in EABL in a share swap. The deal was terminated last year after EABL opted out.
Its increased activity in the local market after the recent re-launch of its Redds brand is expected to spark off intensified rivalry with EABL, which in recent days has introduced new brands such as Tusker Lite and Pilsner Ice to defend and grow its stake in the competitive business environment.
Dutch brewer Heineken has also opened its regional headquarters in Nairobi to help push its brands.
It has been supplying its flagship Heineken beer through a local distributor, Maxam Limited, which is associated with businessman Ngugi Kiuna and has held the franchise since 2007.
Heineken is set to hire a marketing team headed by Koen Morshuis, the general manager East Africa, to get a larger share of the East African market. “After doing research we saw the results and think it’ is time to put people here (Nairobi office) and we shall have a huge marketing push,” Morshuis told the Business Daily recently. The global brewing giants are seeking a stronger foothold in emerging countries where beers sales are still rising compared to Europe and the US.
Data from Japanese investment banks Nomura show that beer consumption increased in Africa, Asia and Latin America by four per cent, 4.8 per cent 2.7 per cent respectively in 2010 as volumes dropped in North America, Western Europe and Eastern Europe by 1.5 per cent, 2.3 per cent and 1.5 per cent respectively.
East Africa is increasingly becoming a battle zone between SABMiller and Diageo led EABL.
Already, a vicious battle for dominance is under way in Uganda between Uganda Breweries, owned 98.2 per cent by EABL, and Nile Breweries, which is 60 per cent owned by SABMiller.
In Tanzania, Diageo through EABL ended a partnership with SABMiller over the running of Tanzania Breweries Limited and bought a majority stake in rival Serengeti Breweries last year.
This has set off a vicious market share war between the hitherto business partners. The number three global brewer, Heineken, has been a late entrant into Africa but wants to build its stake after clinching share deals in Nigeria, Rwanda, South Africa and Ethiopia in recent months.
6 Dec. 2011