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.
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