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.
Heineken Sees Boost From ‘Not for Bond’ Tequila Beer Desperados
Desperados, introduced by the Dutch brewer in 1995, saw sales gain 26 percent last year compared with 5.4 percent volume growth for the eponymous Heineken brand and has the potential to continue achieving “double-digit” improvements, according to Willem Jan van der Hoeven, Heineken’s head of global brands.
The Amsterdam-based company still sells more than 17 times as much Heineken, based on Euromonitor International estimates, illustrating the potential of Desperados. Both brands bettered Heineken’s consolidated beer volume, which grew 3.2 percent on an organic basis.
“When I look at the world, I look to see where I can shoulder-rub with other categories,” Van der Hoeven said in an interview in London. Desperados offers drinkers an alternative to spirits on a night out, he said.
As beer sales increase at a slower pace, particularly in developed markets where wines and spirits are posing a bigger challenge, brewers such as Heineken are having to seek growth outside of plain lager. Competitors including Anheuser-Busch InBev NV (ABI) and Carlsberg A/S (CARLA) have been buying or creating cider brands, while the increasing popularity of small craft beers in the U.S. has spurred renewed interest in novel brands.
“Alternatives to beers have existed for more than just a couple of years now, but brewers these days have realized they have to diversify and they don’t really have a choice,” said Spiros Malandrakis, an analyst at research company Euromonitor.
Made using real tequila from Mexico, the lime-tasting Desperados was created to offer a different take on beer. Introduced initially across European countries including Germany and Poland, it is now available from Russia to Brazil, though not in the U.S., where laws prohibit the sale of the drink because it mixes beer and spirits.
The brand’s volume last year was 157 million liters, according to estimates supplied by Euromonitor, compared with 2,740 million liters for the Heineken brand.
With an alcohol content of 5.9 percent, Desperados crucially has a less bitter taste to appeal to younger palettes. It’s also better-suited to female tastes, Van der Hoeven said.
The executive, who also oversees the Strongbow cider, Amstel and Sol brands, said Desparados provides a “nice benefit” for the Heineken brand, by helping to capture young drinkers who may later switch to Heineken and Sol.
Not for Bond
By contrast, Desperados “isn’t for James Bond,” he said, referring to the Heineken brand’s promotional partnership with the movie franchise.
Priced at almost double the average price of mainstream beers in most markets, Desperados helps to boost both revenue and profit, according to Van der Hoeven.
The brand’s marketing is skewed toward bars and the Internet, as well as festivals and gigs, he said, targeting occasions where people may choose to drink spirits.
Van der Hoeven, who worked on the Most Interesting Man branding campaign for Heineken’s Dos Equis brand, said he’s particularly pleased with an advertisement on Desperados’ Facebook page which invites viewers to play along with its plot, including interacting with a snake and crafting the tattoo of one of the characters. The video got 10 million consumers engaged, he said, declining to comment on the level of spending on the brand.
Heineken has said it expects overall marketing spending to be 11 percent to 13 percent of sales. That’s lower than average of food companies and the 17 percent to 18 percent of spirits companies, Nomura analysts estimate, saying “we could question whether this level of spend is adequate in the longer term.”
As the Heineken brand and company becomes more global, illustrated by the recent purchase of control of Asia Pacific Breweries Ltd. (APB), smaller brands such as Desperados may prove to be the main growth drivers for the Dutch company. Moreover, as business becomes tougher in developed markets -- where Heineken is suffering from the dual effects of government budget cuts and high unemployment -- novel beers may prove a boon.
“They’re trying to push alternative products instead of their flagship brands,” Malandrakis said.
Still, according to Van der Hoeven, there’s still scope for established brews to grow in harmony with innovative brands.
“There’s still a lot of need for a very good straightforward lager,” the executive said.
21 Nov. 2012