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.
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.
Having a Beer With the Boss of Molson Coors
Molson Coors boss Peter Swinburn can have a beer whenever he wants, of course, but recently he had good reason to crack open a cold one: Coors Light, his firm's top American brand, overtook Budweiser to become the nation's No. 2 best-selling beer. For the first time in almost two decades, a brew not made by Anheuser-Busch InBev emerged as one of America's two favorites (Bud Light remains No. 1). "I went and had a Coors Light to celebrate," Swinburn says.
Still, for all the merriment that often surrounds drinking it, the business of making beer has been pretty tough lately. Indeed, while liquor and wine sales have grown significantly over the past few years, the U.S. market for beer has been flat. It's even worse for mainstream brands, prompting some industry watchers to question whether there's a generational shift away from the beers that baby boomers and older Americans craved. Despite Coors Light's new ranking, Molson Coors (TAP: 42.87, -0.08, -0.19%), the world's seventh-largest brewer, is selling less beer now than it did in 2010. The Denver-based firm has missed profit expectations for four straight quarters; its stock was down 11 percent last year. Some analysts wonder how Molson Coors can increase its business considerably, because the firm is already the top beer seller in Canada and No. 2 in the U.S. "It's hard to grow when you already have a big part of the market," says Edward Jones analyst Brian Yarbrough.
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.Swinburn, a 37-year veteran of the beer business who took the helm in October 2007, is looking to tap other markets -- the firm sold 50 percent more beer internationally in the first three quarters of 2011 than it did in the year-earlier period. At home, the firm has grown its craft-beer sales significantly, thanks to its successful Blue Moon brand and its recently launched Batch 19 -- a crisp, earthy brew based on a pre-Prohibition recipe found in the company's Golden, Colo., archives. Coors Light grabbed the No. 2 beer spot in part because of its neat bottle (the white mountains on the bottle turn blue when the beer is very cold). The company has also cut costs since Molson and Coors merged in 2005. But all those moves are small beer compared with the problem of getting people to drink a lot more of its core brands, Molson Canadian and Coors. SmartMoney sat down with Swinburn at the company's headquarters to discuss how he plans to woo his top customers, why his investors should stay patient and when he tasted his first Molson Coors beer.
What was it like taking the helm at the firm during the recession?
It was a bit like being hit by a tsunami. Our core consumers, who in the U.S. are 21- to 25-year-old males making between $20,000 and $40,000 a year, got hit tremendously hard. I mean, virtually overnight. It made us focus on innovation, which we had not done a good job of at all until then, and it also accelerated our move into other international markets.
Do you think the growth in those new markets will make up for what's lost here?
No. Eventually they will contribute significantly to our growth, but our core business is so big that that's what we have to continue to concentrate on.
How do you compete with other alcoholic beverages?
When you look at the needs of our consumers, undoubtedly there's white space that we're not filling and that is being filled to some extent by non-beer products. We need to ensure that we address the space while also making sure our existing brands are relevant. In some instances, we can address it with beers. Our new Batch 19 is a pre-Prohibition beer. It has a sort of rebelliousness about it as a brand, and we've been building off that.
So how is Molson Coors innovating to fill more of that white space?
The cold-activated bottle for Coors Light has been a tremendous success. Where we need to build is from a product point of view. We launched a brand called Leinenkugel's Summer Shandy, which was the most successful craft launch this summer. But unless you understand what needs you're satisfying, just coming out with a flavor or color or taste is like throwing mud at a wall.
The stock hasn't performed well lately. What should investors think?
In three years, we grew profits by over 30 percent, and we've paid off debt. We're throwing up twice as much cash now as we were three years ago. Understandably, what investors are saying is, 'You are a company that is very deep in some very big markets; we don't know where growth is going to come from. Until you prove to us that you can show growth, we're cautious.' That's what's happening, in a nutshell.
You grew up in Wales. When did you try your first Molson Coors beer?
When I came to the States 20-plus years ago, we brought our children to Disney World. We were here for three weeks. The first few days, I tried every beer I could, and I didn't like any. I eventually found Coors Original. That's what I drank all the time I was here. About 12 years later, I began working for them.
16 Mar. 2012