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.
Who brews your beer?
Until the thirteenth century, monasteries were the only places where beers were manufactured on anything like a commercial scale in Europe. Beer was brewed for the monks and for guests, pilgrims, and the poor. Later, monks started to brew beer for noblemen, to sell their brew in ‘monastery pubs’, and provide their produce for church celebrations and feasts where peasants could drink for free.
However, monastic beer production became increasingly undermined by commercial breweries from the fourteenth century onwards. Demand for beer increased with income growth, the expansion of trade and towns, and an increasing awareness of water pollution. Traveling merchants wanted lodging, food and drink, and ‘inns’ and ‘taverns’ sought to provide it. Cities of trade – such as London, Bruges, Hamburg and Munich – soon became important centers of brewing.
The decline in monasteries’ beer production was also influenced by innovation and local politics. The introduction of hops was a major innovation that would ultimately transform the global beer economy, however, it took centuries to be widely accepted because of its impact on local taxes. Before hops, local rulers taxed breweries through a tax (‘grutrecht’) on herb mixes (‘grut’) to flavor and preserve beer – of which they controlled the production and sales. While hops improved the taste and preservation of beer and allowed for transportation over longer distances, hops threatened the local rulers’ tax revenue as they could not control the sale of hops. To compensate for the lost tax income, rulers wanted to impose taxes on beer itself. Yet as monasteries were absolved from paying taxes, rulers favored seeking their supplies from commercial breweries which they could tax.
Intertwined geo-political and religious changes also played a role in the historic decline in monastery-brewed beer. During the Reformation, many Catholic monasteries were destroyed in large parts of Europe – and, with it, their beer production ceased. Inevitably, commercial breweries replaced them. The final straw was the French Revolution which clamped down on the Catholic Church. Under Napoleon, the French expansion destroyed the remaining European monasteries – and their breweries too.
Scientific discoveries in the eighteenth and nineteenth centuries also caused a dramatic transformation of the beer industry. Increased knowledge of yeast, steam engines, and refrigeration made it possible to produce new types of beer and to control the production process more accurately. Thus, the brewery industry embarked on the road to industrialization, causing notable consolidation of the market. In the USA, the number of breweries decreased from just over 1800 breweries in 1900, to only 1345 in 1915. In 1950, that number had decreased to 407, and by 1950 there were only 101 breweries still in business. Conversely, the average brewery output grew from 2.6 million liters in 1900 to 219.2 million liters in 1980. In the UK, the number of breweries collapsed from 6447 in 1900, to just 142 in 1980, whilst their average output grew from 0.9 million liters to 48.1 million liters over the same period.
Consolidation was reinforced by scale economies in distribution and the arrival of TV advertisements and globalization. During the 1980s and 1990s, breweries started looking abroad for expansion. Breweries such as Heineken (Holland), SABMiller (South Africa), and Interbrew (Belgium) acquired breweries in Eastern Europe, North and South America, and Asia. The largest brewer, Anheuser-Busch Inbev NV, is a product of the 2004 merger between (Belgian) Interbrew and (Brazilian) AmBev and the 2008 merger with Anheuser-Busch. This holding now produces 25% of the world’s beer.
Furthermore, all over the world, traditional ales largely produced with top fermentation lost market share to lager beer brewed with bottom fermentation. Lager beer (‘pils’) came to dominate the beer market globally. A further shift to even lighter beers was caused by grain shortages in the first half of the 20th century and growing consumer preferences for low-calorie products. Cheaper grains such as corn and rice were used, resulting in ‘light lager’ like Budweiser. In response to a growing demand for low calorie foods and drinks, brewers discontinued the production of dark beer and produced ‘diet’ or ‘light’ beers, such as Miller Lite. Light beer quickly became the most popular option in the US.
However, the growing domination of increasingly standardized lager and light beers produced by increasingly fewer brewing companies has led to a counter movement, which started in the US. New breweries with ‘special beers’ and ‘older’ style beer were labeled ‘microbreweries’ because of their small scale. Similar developments can now be observed in many countries. While the share of the microbreweries in the total global beer production is still relatively small, they are growing rapidly.
In countries like Belgium, beer brewing in (collaboration with) monasteries and abbeys has witnessed a remarkable revival and abbey beers are now the fastest growing segment of the Belgian beer market. Yet only a few of them – mainly the very popular Belgian Trappist beers – are still produced in monasteries. Most are recipes new and old brewed by smaller breweries, yet others are attempts by larger beer brewers to imitate the microbreweries or even take them over.
Because of their success, some of these breweries have since outgrown the ‘micro’ level, but are still labeled microbreweries because of the style of beer they are producing. Some are now referred to as ‘specialty brewers’. Paradoxically, today the largest US owned brewery is the Boston Brewing Company, which started only a few years ago as a microbrewery. This example powerfully illustrates how the global beer markets appear to have come full-circle via consolidation, global mergers, and acquisitions, back to the growth of the microbrewery.
30 Dec. 2011