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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.

Africa. Heineken “satisfied” with ownership mix – analyst

Heineken appears to be happy with its mix of business models in Africa and has little interest in entering the local beer segment, according to an analyst.

In a note on Heineken's investor day in Lagos yesterday (13 November), Nomura said that the group “continues to appear happy to have different business models across the region”. These include majority control in Nigerian operations, a partnership with Diageo in South Africa, and Coca-Cola/beer combinations in Central Africa.

The major difference to its competitors in the region is its focus on international premium brands, especially Heineken, Nomura said. As a result, the brewer has “no interest in entering the local opaque beer segment,” the note said.

It flagged that, with the brewer's Asia Pacific Breweries acquisition, emerging markets are set to account for 55% of EBIT and 62% of consolidation beer volumes. Within that, Africa (19% of EBIT) has been “a key driver accounting for 42% of group profit growth in the 2007-11 period”, Nomura said.

Nigeria, the analyst estimates, accounts for around half of Heineken's African earnings. The country has recognised growth drivers, including strong population growth, a middle-class boom and urbanisation. But, it noted: “Half the population is Muslim, mainly based in the north, which restricts consumption of beer, but provides an opportunity for malt-based drinks”.

Heineken is focussing on high-end on-trade accounts in Nigeria as it looks to compete against spirits, the note said. Around 65% of the country's beer volumes are from the on-trade, especially in “beer parlours” accounting for 40%, it noted. However, the off-trade is growing faster, with some growth of modern retail from low levels.

15 Nov. 2012



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