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.
Craft Brew Alliance Reports Full Year 2011 Results
Significant gross profit growth of 34 percent for the full year;
Adjusted Net Income increases 94 percent to $3.2 million
Craft Brew Alliance, Inc. (“CBA”), an independent craft brewing company, reported net sales of $149.2 million and net income of $9.7 million for the year ended December 31, 2011 as compared with net sales of $131.7 million and net income of $1.7 million a year ago. Adjusted net income for 2011 was $3.2 million, excluding the one-time gain on sale of Fulton Street Brewery, LLC (“FSB”), of $6.5 million, net of tax. We reported $0.51 earnings per share on a fully diluted basis for the year as compared with $0.10 per share last year. Adjusted earnings per share for 2011 was $0.17, excluding the one-time gain on sale of FSB of $0.34 per share.
Significant financial highlights for the year ended December 31, 2011 include:
•Net sales increased $17.5 million, or 13 percent, to $149.2 million compared with 2010
•Depletion growth and non-contract shipment growth were each 7 percent for the full year
•Gross profit percentage increased 470 basis points
•Sales and marketing expense increased $7.6 million versus last year reflecting investments towards critical growth initiatives
•Capital expenditures were $8.5 million as we continued to make strategic investments in systems and infrastructure
“We are pleased to see our 2011 top and bottom line results reflect improvements in our business driven by our significant investments in our innovative portfolio of beers and our marketing and sales capabilities. Our primary focus remains to be true to our customers, by delivering the most diverse portfolio of high quality beers and brands in the industry, that provide unique beer experiences for all occasions,” said Terry Michaelson, CBA’s CEO. “While the full year results indicate that our strategy has gained traction with consumers, we believe that there are further underlying strengths in our brands and strategy that have yet to be realized and will drive long-term profitable growth.”
Net sales for the year ended December 31, 2011 were $149.2 million, an increase of $17.5 million, or 13 percent, from net sales of $131.7 million for 2010. A combination of factors drove the increase, including increased shipments to wholesalers, a decrease in master distributor fees, price increases for our beers sold to wholesalers and an increase in revenues earned from our restaurants and pubs following the merger with Kona Brewing Co., Inc. (“KBC Merger”).
Total shipments for the year ended December 31, 2011 were 672,600 barrels, an increase of 64,800 barrels, or 11 percent, from 607,800 barrels for 2010, primarily reflecting the increase in shipments to wholesalers and growth in our contract brewing business. Shipments growth excluding contract shipments was 7 percent.
Cost of sales as a percentage of net sales improved 470 basis points for the year ended December 31, 2011, reflecting the increased volumes, decreased distributor fees, elimination of costs related to the Kona Brewing alternating proprietorship, improved quality and capacity utilization and an increased selling price for our beers. These favorable factors were partially offset by increased shipping costs due to higher fuel prices in 2011 as compared with 2010.
Selling, general and administrative (“SG&A”) expense of $39.7 million for 2011 increased $9.8 million, or 33 percent, from $29.9 million for 2010. This increase reflects our investment in critical new selling and marketing initiatives that have led to sales and profit growth. The overall SG&A increase was also driven by costs related to the operations acquired in the KBC Merger. We expect that the rate of increase in SG&A spending for 2012 will not be as significant as that seen during 2011.
“The full year 2011 results present a solid statement not only about our ability to drive brand development and sales capabilities, but also the CBA team’s ability to balance aggressive top line growth and investment while controlling overall spending to generate improved profitability,” said Mark Moreland, CBA’s CFO. “We believe the current overall health of the business and our new marketing and sales initiatives will drive continued top and bottom line improvement for 2012.”
Cash Flow and Liquidity
Cash provided by operating activities was $6.7 million for the year ended December 31, 2011 compared with $10.8 million for 2010. The $4.1 million decrease was primarily due to a one-time working capital fluctuation related to our sale of our investment in Fulton Street Brewery in May 2011 and increased inventory levels resulting from anticipated increases in demand. Capital expenditures for the years ended December 31, 2011 and 2010 were $8.5 million and $4.7 million, respectively. The capital expenditures for 2011 included projects designed to enhance our ability to provide a variety of package options in order to target our core brand offerings in our breweries, and improve our quality assurance and information technology systems, including continuing investments towards a company-wide demand planning and order management system.
We remain confident that our targeted investments into our brands, marketing and sales resources, in conjunction with our innovative, high-quality craft brewing capabilities, will support continued volume and revenue growth while generating improved bottom line results.
We currently anticipate results for the full year 2012 as follows:
•Depletion growth in the high single digit percentage to low double digit range reflecting both continued strength of our brands and continued growth of the craft category.
•Sales growth of approximately 10% to 12%.
•Gross margin rate approximately 100 basis points lower than 2011, reflecting pressure from grain prices and assuming that fuel prices remain relatively consistent with recent levels.
•SG&A expense ranging from $42 to $44 million, reflecting continued investment into sales and marketing initiatives.
•Diluted earnings per share in the range of $0.20 to $0.25.
•Capital expenditures of approximately $8.5 to $9.5 million, continuing our investments in capacity and efficiency improvements, and quality initiatives.
Statements made in this press release that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future, including the level or effect of increased SG&A expense, the amount of capital spending and the benefits or improvements to be realized from those capital projects, are forward-looking statements. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, including, but not limited to, the Company's report on Form 10-K for the year ended December 31, 2011. Copies of these documents may be found on the Company's website, www.craftbrew.com, or obtained by contacting the Company or the SEC.
About Craft Brew Alliance
CBA is an independent, publicly traded craft brewing company that was formed with the merger of leading Pacific Northwest craft brewers – Widmer Brothers Brewing and Redhook Ale Brewery – in 2008. With an eye toward preserving and growing one-of-a-kind craft beers and brands, CBA was joined by Kona Brewing Company in 2010. When Kurt & Rob Widmer founded Widmer Brothers Brewing in 1984, they didn’t confine their brewing exploration to strict style guidelines. To this day, Widmer Brothers continues to create craft beers with a unique and unconventional twist on traditional styles that are award winning and please a wide range of craft beer lovers. Redhook began in a Seattle transmission shop in 1981, and those colorful roots are reflected in the brand’s personality to this day. The eminently drinkable beers consistently win awards and please crowds across the United States. Kona Brewing was founded in 1994 by the father and son team of Cameron Healy and Spoon Khalsa, who dreamed of crafting fresh, local island brews with spirit, passion and quality. As the largest craft brewery in Hawaii, Kona personifies the laid-back, passionate lifestyle and environmental respect of the Hawaiian people and culture.
16 Mar. 2012