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.
Asahi Plans Takeovers in Southeast Asia
“We are looking at Indonesia, Vietnam, Thailand, the Philippines and Malaysia,” Asahi President Naoki Izumiya, 63, said in a Dec. 12 interview in Tokyo. Kirin will “consider corporate tie-ups and small-scale mergers and acquisitions in Southeast Asia,” Chief Executive Officer Senji Miyake said in an interview yesterday.
The brewers’ push into the region will give them access to markets where some rivals’ operating margins are more than double that of both Asahi and Kirin’s, as Japan’s aging population crimps demand in their home market. Asahi has spent more on acquisitions this year than any other after domestic demand for beer slumped in 2010 for a 14th straight year and the yen’s gain boosted Japanese companies’ buying power abroad.
“The Southeast Asian market is not yet dominated by one company so there are opportunities,” said Mikihiko Yamato, an analyst at JI Asia, who recommends buying Kirin shares.
Asahi has gained 7.6 percent in Tokyo trading this year, compared with an 18 percent slide for the broader Topix index. Kirin has declined 17 percent.
The yen has risen more than 7 percent against the dollar in the past year, the biggest gainer among 10 major currencies tracked by Bloomberg.
Asahi, Japan’s biggest beermaker by volume, made 6.6 percent of sales abroad last year, compared with 23.4 percent for Kirin, the biggest by market value, according to company statements. Asahi’s sales from overseas will probably increase to 10 percent this year, said Takayuki Tanaka, a spokesman for the Tokyo-based brewer.
“We want to expand our Super Dry brand and sell beer globally,” Asahi’s Izumiya said. “We can’t just cut costs. We have to increase our top line as well.”
Carlsberg A/S will produce and sell Asahi’s “Super Dry” beer in Malaysia, the Japanese brewer said in a statement yesterday.
Asahi earlier said it aimed to boost sales to 2 trillion yen to 2.5 trillion by 2015, with 20 percent to 30 percent revenue from overseas. Revenue last year was about 1.5 trillion yen.
“The Southeast Asian market is twice the size of Oceania, including Australia, and they want to move quickly,” said Hiroshi Saji, a Tokyo-based analyst for Mizuho Securities Co. who recommends buying Asahi shares.
The total population of Indonesia, the Philippines, Vietnam, Thailand and Malaysia will grow to 553 million in 2016 from 519 million this year, according to International Monetary Fund estimates compiled by Bloomberg. The population of Southeast Asia, including Myanmar and Singapore, will probably increase 7 percent to about 650 million.
Japan’s will probably contract 1.1 percent to 127 million in the same period, according to the data.
Beer sales by volume of domestic brewers in the world’s third-largest economy contracted 3.5 percent to 2.9 million kiloliters last year and dropped 47 percent in the past decade, according to the data from the Brewers Association of Japan.
Asahi’s operating margin of 9.73 percent compares with 26.74 percent for the Philippines’ San Miguel Brewery Inc. (SMB) and 22.47 percent for PT Multi Bintang Indonesia, according to latest filings compiled by Bloomberg. Kirin has a profit margin of 6.96 percent, data compiled by Bloomberg shows. Malaysia’s Guinness Anchor Bhd. has an operating margin of 16.27 percent while Thai Beverage Pcl. (THBEV)’s is at 12.14 percent, the data show.
San Miguel Brewery, a unit of the Philippines’ biggest company by sales that dominates the country’s beer market, is 48 percent owned by Kirin, which has been investing in the southeast Asian country for at least a decade.
Kirin is also the biggest investor in Singapore beverage maker Fraser & Neave Ltd. with a stake of about 15 percent, according to data compiled by Bloomberg. Kirin in 2009 took Lion Nathan Ltd. private, gaining full control of Australia’s second- biggest brewer.
Asahi’s biggest acquisition has been its purchase of Independent Liquor Ltd. of New Zealand for NZ$1.5 billion, or about $1.3 billion when it was announced in August. The company bought Australian beverages firm P&N Beverages Pty Ltd., New Zealand’s Charlie’s Group Ltd. and Independent Liquor and Malaysia’s Permanis Sdn. All deals were completed in the second half of 2011.
Asahi has announced more than $3.3 billion worth of purchases abroad in the past five years, compared with about $14 billion for Kirin, according to data compiled by Bloomberg.
Kirin last month agreed to buy out shareholders in Brazilian beermaker Schincariol Participacoes e Representacoes, completing its biggest acquisition. The deal valued the Brazilian company at about $3.6 billion excluding debt, when combined with the October purchase of a 50.45 percent stake.
While Kirin may continue to make acquisitions, they will probably be “small-scale” purchases, Miyake said. “The time for big M&A is over for now and our number one priority is to pay off our debts.”
The brewer of Kirin Lager plans to expand in Vietnam Thailand and Indonesia, he said.
Kirin last month also agreed to assume 1.1 billion reais ($597 million) of Schincariol’s debt and estimated 2.1 billion reais of potential labor, legal and tax liabilities as part of the deal. It has about $1.9 billion of bonds and loans due in the next decade, according to data compiled by Bloomberg.
The company’s debt-to-equity ratio jumped to 1.1 times from 0.5 times after the purchase of Schincariol, Miyake said.
15 Dec. 2011