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4-2017

Global hop market

A 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 Russia

Germany 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.

AB-InBev on Shortlist for China Brewery Deal

Anheuser-Busch InBev NV, the world's biggest brewer, and two Chinese brewers are on the shortlist to buy most of the operations being sold by China's Kingway Brewery Holdings Ltd, sources with direct knowledge of the matter said.

The deal value could be as high as $700 million and the short-listed bidders are expected to conduct due-diligence over the next two months, one of the sources said.

China Resources Enterprise Ltd, which owns Snow beer brand, and Beijing Yanjing Brewery Co Ltd are among the other companies that have advanced to the next round, the sources said.

Foreign and Chinese brewers are jostling to grow their market share in China, the world's biggest beer market, and Kingway's planned sale is one of the few sizeable brewery assets that has come up for sale in recent times.

The eventual winner can benefit from strong growth in China's beer consumption. China's beer demand hit 450 million hectoliters in 2010, nearly twice that of the United States, and is expected to grow 5% per year in coming years, double the 2.5% growth forecast for the global market for 2011.

Kingway, with a market value of about $655 million, has said it does not plan to sell an equity stake in the company. The stock was trading up 2.0% on Friday afternoon, outperforming the 1% gain of the broader market .HSI.

The stock is up about 38% so far this year on expectations of strong bidding.

Kingway Brewery has invited bids for equity stakes in six breweries, all beer and beer-related trade marks, domestic and overseas distribution networks, the sources said. The company plans to retain two of its production facilities, one of the sources said.

Anheuser-Busch and China Resources declined comment, while Kingway and Yanjing officials were not immediately available for comment. The sources declined to be identified as the discussions were private.

COMPETITORS

AB-InBev was the third-biggest brewer in China with a market share of 11.4% in volume terms as of 2010, according to data compiler Euromonitor. Its main breweries are in Fujian Sedrin in southeast China, and Harbin in the northeast.

China's largest brewer China Resources Snow is a joint venture between China Resources and SABMiller Plc.

SABMiller has said that any deal in China would be through its CR Snow joint venture, in which it own 49 pct with the rest owned by China Resources Enterprise.

AB-Inbev has always stressed it looks to control its own operations in China and analysts say a deal with Kingway would complement its footprint in China.

In April last year, GDH Ltd, a unit of state-backed Guangdong Holdings Ltd, had exercised the right to buy the 21.37% stake in Kingway held by a Heineken NV joint venture in China, blocking a bid from China Resources.

GDH paid 1.08 billion yuan ($164.94 million) for the stake, increasing its holding to 73.82%.

Kingway was previously jointly controlled by Asia Pacific Breweries Ltd, a unit of Singapore food and property conglomerate Fraser and Neave Ltd, and the world's third-largest brewer Heineken.

Read more: http://www.foxbusiness.com/industries/2012/03/02/ab-inbev-on-shortlist-for-china-brewery-deal/?#ixzz1oSMMxSHz

7 Mar. 2012

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