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.
Kirin to Consider ‘Small-Scale’ Acquisitions in Southeast Asia
The company will “consider corporate tie-ups and small- scale mergers and acquisitions in Southeast Asia” with partner Fraser & Neave Ltd. (FNN) and focus on lowering its debt, Chief Executive Officer Senji Miyake said in an interview in Tokyo yesterday. “The time for big M&A is over for now and our number one priority is to pay off our debts.”
The Tokyo-based beverage maker plans to expand in Vietnam, Thailand and Indonesia, Miyake said, pitting it against Asahi Group Holdings Ltd. (2502), which also seeks to grow in the region. Kirin has invested more than $4 billion abroad in 2011, continuing its overseas push as beer demand declined at home for a 14th straight year in 2010.
“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.
Kirin has made at least four acquisitions this year, including Brazilian beermaker Schincariol Participacoes e Representacoes, and invested $400 million for a 40 percent stake in a soft-drink venture with state-backed China Resources Enterprise Ltd.
Kirin fell 1.1 percent to 932 yen at the 3 p.m. close of trading in Tokyo. The stock has declined 18 percent this year.
The brewer of maker Kirin Lager seeks to distribute its brands in Southeast Asia next year through Fraser & Neave, Miyake said. Kirin is the biggest shareholder of Fraser & Neave, with a holding of about 15 percent, according to data compiled by Bloomberg.
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, plans takeovers across Southeast Asia to access wider margins and it “already” knows the targets, President Naoki Izumiya said in an interview on Dec. 12.
Kirin made 23.4 percent of sales abroad last year, compared with 6.6 percent for Asahi, according to company statements.
Kirin last month agreed to buy out shareholders in 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 initial purchase in October of a 50.45 percent stake.
The brewer last month also agreed to assume 1.1 billion reais ($593 million) of Schincariol’s debt and estimated 2.1 billion reais of potential labor, legal and tax liabilities as part of the deal.
Kirin plans to lower its debt, Miyake said, without elaborating what steps it will take. The company’s debt-to- equity ratio jumped to 1.1 times after the purchase of Schincariol, he said.
The brewer increased its stake in Manila-based San Miguel Brewery Inc. (SMB) to 48 percent in 2009, bought a 14.7 percent of Singapore’s Fraser and Neave Ltd. last year and purchased a majority stake in Vietnam’s Interfood Shareholding Co. for an undisclosed sum in March.
15 Dec. 2011