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.
Heineken Chases Wider Profit Margin in China by Focusing on Premium Beer
Premium beer is 10 times more profitable than mass market tipple prompting the two partners to focus on the segment, Theo de Rond, president of Heineken’s Asia Pacific region, said in an interview in Singapore yesterday. Premium beer sells for about four times more than the regular brew in China, Chief Executive Officer Jean Francois van Boxmeer said in Singapore.
Heineken, struggling with declining beer sales in western Europe, is competing with companies such as Anheuser-Busch InBev NV (ABI), Kirin Corp. and Tsingtao Brewery Co. in the world’s biggest beer market by volume. Heineken and its Singapore-based partner, which sell the Heineken and Tiger beers in the world’s most- populous nation, sold the stakes held by their joint venture in China in some breweries to focus on the high-end market.
“You have population growth and you have economic growth,” said Boxmeer. “We’re not operating in the mainstream market in China, we’re operating in the premium market.”
While China accounted for 71 percent of the whole beer market in the Asia-Pacific region last year, it contributed 16 percent of the profit, Van Boxmeer said. That’s because the average price of beer in China is about 25 euros ($33) per 100 liters, compared with 51 euros in India, 60 euros in Vietnam and 182 euros in Australia, he said.
China Beer Consumption
In 2010, China consumed 44.8 billion liters of beer, 6.3 percent more than the year earlier, according to a statement from Asia Pacific Breweries (APB) in July.
Consumption of premium beer in China is estimated by Asia Pacific Breweries to grow 12 percent annually through 2020 to 2.1 billion liters, Asia Pacific Breweries said yesterday.
“Focusing on the premium side of the market is the approach foreign brands should take,” said Olive Xia, an analyst at Core Pacific-Yamaichi International Ltd. in Shanghai, who has a “buy” rating on Tsingtao. Local brands dominate the non-premium market, she said.
China’s gross domestic product has grown 11.2 percent on average over the past five years. Societe Generale SA expects expansion of 9.2 percent this year and 8.1 percent in 2012.
Exiting Some Segments
Heineken-APB (China) Pte agreed to sell a 21.4 percent stake in Kingway Brewery Holdings Ltd. (124), a Chinese beermaker, for 1.08 billion yuan ($170 million) in March.
The joint venture agreed in July to sell stakes in Jiangsu Dafuhao Breweries Co. and Shanghai Asia Pacific Brewery Co. to the maker of Snow beer, a joint venture of SABMiller Plc (SAB) and state-owned China Resources Enterprise Ltd. (291)
China Resources Enterprise had the biggest share of China’s beer market last year with 21 percent, followed by Tsingtao Brewery Co. at 14 percent and Anheuser-Busch InBev NV’s 11 percent, according to Asia Pacific Breweries.
Heineken and Asia Pacific Brewery make Heineken and Tiger brand beer at plants in Guangzhou and Hainan for the Chinese market.
Heineken in October reported so-called organic revenue growth of 3 percent in the third quarter, beating estimates, as ad campaigns helped curb a decline in sales in western Europe. It’s among brewers suffering as consumer confidence wanes in western Europe, where it made almost half its revenue last year.
13 Dec. 2011