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.
APB Reports 34% Rise in ANP in First Quarter
•Profit before interest and taxation gained 29% to S$267.9 million
•Revenue grew 16% to S$994.3 million
Asia Pacific Breweries Ltd (APB) is pleased to announce a strong performance for the first quarter ended 31 December 2011.
Outperforming last year, attributable net profit (ANP) gained S$39 million or 34% to S$154.7 million. Profit before interest and taxation (PBIT) grew S$60.4 million or 29% to S$267.9 million. Group Revenue increased 16% to S$994.3 million.
Excluding translation differences, the impact of acquisition1 and disposal2 and gestation loss3 from Guangzhou greenfield brewery last year, organic APBE and PBIT grew 31% and 29% respectively.
Mr Roland Pirmez, Chief Executive Officer, APB commented, “Beer price increases and robust beer sales in most of our regional markets were the reasons behind the 16% top line gain. The double-digit volume growth in Vietnam drove our sales in Indochina while Indonesia and Papua New Guinea led volume growth in South & Southeast Asia and Oceania respectively. As a result, IndoChina and Thailand generated 38% of Group revenue while South & Southeast Asia and Oceania recorded 31% and 30% respectively.”
IndoChina (i.e. Vietnam, Cambodia and Laos) and Thailand retained its top spot as the Group’s largest PBIT contributor at 45%. The region reported a PBIT gain of 18%, driven by an 18% rise in volume, improved margins from price increases in Vietnam and a favourable sales mix in Cambodia.
Oceania (i.e. New Zealand, Papua New Guinea, New Caledonia and Solomon Islands) reported a PBIT increase of 48%. Continued strong consumer demand in Papua New Guinea, favourable translation gain from a 17% appreciation in the Kina as well as contributions from the newly acquired brewery in Solomon Islands attributed to the robust performance of the region. Oceania accounted for 28% of Group PBIT.
PBIT from South & Southeast Asia (i.e. Singapore, Export Markets, Malaysia, Indonesia and Sri Lanka) grew 18%, owing to double-digit volume growth in Indonesia, Export Markets and Sri Lanka as well as improved margins from price increases. The region contributed 26% to Group PBIT.
North Asia (i.e. China and Mongolia) recorded a 66% rise to S$0.3 million in PBIT with improved margins resulted from the restructuring of China operations to focus on the international premium brand strategy.
Operations Review (1st Quarter)
South & Southeast Asia (Singapore, Export Markets, Malaysia, Indonesia and Sri Lanka)
The region delivered volume growth of 9%, with gains in all operating markets except contract brew operations and Singapore domestic sales where wet weather conditions dampened sales marginally. PBIT grew 18% on the back of double digit volume growth in Indonesia, Export Markets and Sri Lanka, as well as improved margins from price increases.
Indochina (Vietnam, Cambodia and Laos) and Thailand
The region witnessed overall volume growth of 18%, led by strong double digit growth in Vietnam as well as Cambodia, offset by an 11% fall in Thailand due to the flood crisis.
PBIT grew 18%, driven by higher volume, better margins from price increases in Vietnam and favourable sales mix in Cambodia. Excluding translation losses, arising mainly from the 12% weakening in the Vietnamese dong, PBIT grew organically by 31%.
North Asia (China and Mongolia)
PBIT for the region increased 66% to S$0.3 million. The Group’s operations in China reported improved margins following the restructuring of investments to focus on a premium brand strategy. The performance for both periods was impacted by currency realignment of US dollar loans. Excluding such currency impact, PBIT would have been S$1.8 million this quarter and a loss of S$1.4 million last year’s same quarter.
Oceania (New Zealand, Papua New Guinea, New Caledonia and Solomon Islands)
PBIT for the region jumped 48%. However, volume grew by a modest 3% due to challenging market conditions in New Zealand. The robust PBIT performance was driven mainly by continued strong consumer demand in Papua New Guinea, favourable translation gain from a 17% appreciation in the Kina, as well as positive contributions from the newly acquired brewery in Solomon Islands from June 2011.
On a comparable basis, excluding the results from Solomon Islands and translation gain, PBIT grew organically by 30% whilst volume dipped 1%.
Corporate office reported PBIT of S$3.6 million for this quarter mainly due to higher royalty income, lower provision for existing employee share-based and business development expenses.
The recent economic uncertainties may dampen consumer demand. With a high proportion of the Group’s earnings from outside Singapore, the reported financial results will continue to be sensitive to currency movements in the countries where the Group operates.
As announced on 13 July 2011, the Sale of Interest in Heineken-APB (China) Pte Ltd (“Proposed Transaction”) is subject to anti-monopoly examination by the relevant PRC authorities. The Company has been informed by the Purchaser, China Resources Snow Breweries Limited, that the anti- monopoly examination has been extended. While the Company expects the PRC Anti-Monopoly Bureau to make a ruling before the end of February 2012, in line with the stipulated timelines under the Anti-Monopoly Law in PRC, there is no certainty that the Proposed Transaction will be approved by the Anti-Monopoly Bureau.
1 On 6 June 2011, the Group acquired 97.7% of the share capital of Solomon Breweries Limited in the Solomon Islands.
2 On 5 May 2011, Heineken-APB (China) Pte Ltd, a joint venture company of APB, divested its stake in Kingway Brewery Holdings Limited.
3 Gestation loss refers to the first three years’ results from Greenfield brewery in Guangzhou (Guangdong, China).
14 Feb. 2012