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.
Japanese beer makers look to Vietnam for growth
Japan's oldest beer maker, Sapporo Holdings, pulled out of China in 2004 and is boosting production in Vietnam. Rivals Asahi Group Holdings and Kirin Holdings have bought Southeast Asian companies to help offset domestic beer sales that have slumped for at least six years.
The brewers are making the fastest-growing major economy, China, a lesser priority because of slowing population growth and strong competition. The Japanese companies' push to tap younger markets in Southeast Asian countries such as Vietnam may boost sales and margins. It also pits them against global brands, including European brewers Heineken and Carlsberg.
Vietnam "has 90 million people whose average age is 28 years and love to guzzle beer," said Yoshiyuki Mochida, who heads Sapporo's international business. "It's an era of the warring states for business in Vietnam. If you fall asleep there, your head will be lopped off."
Vietnam retail beer sales will probably rise 20 percent to $4.6 billion this year, or less than a tenth of China's $57 billion, researcher Euromonitor International estimated. The country's per capita beer consumption trailed China's and was the equivalent of about a third of that in the United States, according to research by Kirin.
But while China accounted for 71 percent of the Asia-Pacific region's beer market by volume last year, it contributed only 16 percent of profit, Heineken Chief Executive Officer Jean Francois van Boxmeer said.
Asahi is looking at Indonesia, Vietnam, Thailand, the Philippines and Malaysia for potential acquisitions, said company President Naoki Izumiya. China's beverage market will take a hit in 2015 by slower population growth from the nation's one-child policy, he said.
Japanese brewers need to look to countries such as Vietnam for growth. The Japanese beer industry's 2010 domestic sales by volume, including lower-malt drinks, is 18 percent lower than a decade ago after sliding for six consecutive years, according to Kirin's research.
"Consumption is tied in with population, and we have to face this fact squarely," Kirin Chief Executive Officer Senji Miyake said.
Kirin has a head start in Southeast Asia, said Akane Nakagawa, an analyst at Mitsubishi UFJ Morgan Stanley. Sapporo, which started beer production in Southeast Asia last month, is next, she said.
While Asahi lags behind the other two, it may benefit from synergies as it integrates Malaysia's nonalcoholic drink maker Permanis, which it acquired in the second half of this year, Nakagawa said.
Southeast Asia offers opportunities because of a relative absence of competition, said Mikihiko Yamato, an analyst at JI Asia. The "best-case scenario" would be for the Japanese companies to buy closely held beverage makers where they can negotiate directly with the owners, he said.
Japanese brewers have found China a tough place to do business because a handful of brands dominate China's beer industry.
"Their market share there can't rise," said Tokushi Yamasaki, an analyst at Daiwa Securities Capital. "Competition is too fierce in China."
China Resources Enterprise, the maker of Snow beer with SABMiller, has a 22 percent share. Tsingtao Brewery, part owned by Asahi, has 14 percent, and Anheuser Busch InBev has 12 percent, according to Euromonitor.
"There are giants in the Chinese beer market, and we have no chance to go it alone," said Kirin's Miyake. "There is still a chance for us in Vietnam, from our market analysis."
27 Dec. 2011