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.
EABL takes on SABMiller with a Sh3.9bn war chest
The brewer will build a canning plant in Kenya to help boost the uptake of its products outside the traditional bars and restaurants as regulations restrict beer consumption.
It will also build a bottling plant in Uganda to capture a larger share of growing market that has caught the eye of SAB Miller that is building a second plant in the country—underlining the growing beer wars.
“We are going to make investments of between ?25 million and ?30 million to grow our capacity and enhance our distribution channels in the region,” said Seni Adetu, the chief executive of EABL.
EABL is betting on the investments to support growth that saw it announce a 17.3 per cent rise in net profit for the six months to December to Sh4.8 billion on revenues of Sh27.7 billion, reflecting a 36 per cent growth.
The profit growth was cut by increased investments in plants, higher financing costs and a depreciation of the Kenya shilling in the period under review.
Analysts at Standard Investment Bank (SIB) say the new investments could reduce EABL’s dividend payout for the full year despite the company expecting Sh6.3 billion from the sale of a 20 per cent stake Tanzania Breweries Limited.
“Despite healthy cash flows, we see the additional investments leading to a lower payout, despite the expected full year earnings per share,” SIB said in a statement to investors.
EABL maintained its interim dividend payout at the same level as last year’s Sh2.50 per share and new investments including the purchase of a 20 per cent stake in SAB Miller is expected to pile pressure on its cash.
It borrowed Sh20.7 billion from its parent company Diageo to buy the stake. Its cash pile has reduced from Sh8 billion in July 2010 to Sh2.6 billion in December 2010 and Sh1.52 billion in December.High taxation and increased costs--especially those brought by volatility in the currency market and commodity booms--include the major challenges that EABL will have to navigate in coming months.
Its share price rose to Sh179 at the close of trading on Friday from Sh176 on Thursday and has shed 5.2 per cent in the past year—making it one of the most resilient counters at the Nairobi Securities Exchange where firms have shed upto 35 per cent over the period.
It needs to defend and grow its share of the regional market—which is increasingly becoming a battlezone among multinationals SABMiller, Heineken and Diageo led EABL that has plants in Kenya, Uganda and Tanzania with distribution networks in Rwanda and South Sudan.
Already, a vicious battle for dominance is underway in Uganda between Uganda Breweries, owned 98.2 per cent by EABL, and Nile Breweries, which is 60 per cent owned by SABMiller--which is opening a second brewing plant in Uganda at a cost of $80 million (Sh6.6 billion).
SAB Miller has also re-entered the Kenyan market with a focus on the premium market with brands like Miller Genuine Draft, Redds and Castle Lager – a segment that has also caught the eye of Heineken, which recently opened a regional office in Nairobi.
In Tanzania, Diageo through EABL ended a partnership with SABMiller over the running of Tanzania Breweries Limited and bought a majority stake in rival Serengeti Breweries where it has increased investments.
20 Feb. 2012