The beer market dynamics in Russia is approaching zero, yet major brewers are divided into those who developed considerably in 2017 and those who considerably reduced their volumes. For instance, company Efes has managed to substantially extend their sales due to restrained pricing policy and activity in the modern trade. Heineken has also demonstrated an excellent performance promoted by significant increase of advertisement budgets launching a non-alcohol sort of the title brand and unusual activity in the economy market segment. Carlsberg and AB InBev have been focusing on margins and lost a market share of their inexpensive brands. Serious dependence on PET package and mass enthusiasm about Zhigulevskoe have negatively impacted the most of big regional brewers, that have been for the first time pressed by the leaders in the key sales channels, especially in Volga and Central regions. In the small business there has been a noticeable slowdown in appearing of new restaurant breweries, yet the number of craft breweries has been growing rapidly. In 2018, the beer market is likely to grow a little, while the share of AB InBev Efes may decrease due to the integration. ...
“Catalogue of Russian Beer Producers 2018” includes 1070 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft microbreweries.The catalogue includes 32 large breweries, 75 regional breweries, 693 industrial mini- and microbreweries as well as 270 restaurant breweries. ...
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.
India. United Breweries: Higher costs a worry, but outlook strong
The rising trend in the cost relative to sales would affect its bottomline in the near term even though the overall long-term outlook is positive, given the company's strong branding and increasing youth market in the country. In the past six months, the maker of Kingfisher beer did see an impressive growth in its topline, but it failed to curtail rising operating costs.
Its sales from operations rose by 26% year-on-year to Rs 733.2 crore during the half year ended September 2011. Operating costs, including raw material expenses, salaries, and fuel costs, rose even faster by 29% thereby impacting operating profitability. Its operating margin fell by 280 bps to 11.3% during the period.
While the overall cost pressure in the economy is cooling off as reflected from the falling rate of increase in the wholesale price index of late, economists feel it may take a while for prices to fall further and stabilise at those levels. Until then, companies, including UB, are likely to report lower profitability.
Another concern is rising interest costs, following higher borrowings. Loan funds went up by 13%in a year to Rs 641 crore in the September 2011. Though small in proportion, interest outgo as a percentage of sales inched up by 50 bps to 2.5% during the six months to September. As a result, net profit for the period fell by 7% notwithstanding the double-digit growth in sales. Higher costs are likely to impact its performance even though sales may grow.
Beer sales are expected to be buoyant, given the rising disposable income and higher propensity towards beer consumption. In addition, UB has been able to grow faster than the sector growth in the past. According to some estimates, its mild beer segment grew twice as fast as the overall growth of the segment last fiscal. This will offer some support to the stock in the coming months.
27 Dec. 2011