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.
Beer market of Vietnam: “Young tiger”Vietnam is one of the few big beer markets that continue to grow steadily. The beer popularity results from its low price, street consumption culture, and social motives. The outlooks of beer market as well as the Vietnamese economy inspire optimism, though the country is heavily dependent on export of goods. The state regulation can be called liberal, but the key risk for brewers is harbored in intensive rising of excise. Within TOP-4 there are two leaders, Sabeco and Heineken that grow at the fastest rates. The first company effectively employs its capacities, the second one focuses on marketing technologies. Almost 80% of the market belongs to century-old brands, yet the middle class and the youth are shifting their interest toward international premium that is growing taking share from the mainstream.
Tsingtao scales up beer operations in China’s bustling Henan province
Centrally located Henan province has in recent years attracted a great deal of attention from the large-scale brewery groups that are expanding brewery activities to inland provinces as disposable income rises across China. Last week Tsingtao Brewery became the latest company to sharpen its focus on the province that is home to about 95m people, and where beer production is booming.
Tsingtao plans to construct a major brewery in the city of Yiyang, close to Luoyang in Henan Province, and this week signed week an agreement with local authorities, People’s Daily reported. Expansions, acquisitions and consolidations are happening at a fast pace these days in inland China and especially in central provinces like Henan, Shanxi, Hubei, Hunan and Guizhou.
Chinese beer market dynamics
As more than 21% of China’s total population resides here, the outcome of the future market share distribution between the major brewery groups is important to follow in order to understand the future dynamics of the Chinese beer market.
Tsingtao’s new brewery is said to be able to produce around 2m hectoliter (hl) annually when the first phase gets up and running, while it will reach a total capacity of 6m hl per year when fully constructed. No details regarding the date of the inauguration of the brewery emerged.
The first investment phase will cost RMB 500m yuan ($80.3m) and will total RMB 1b ($160.5m) for the whole project. The data suggests a price of $27m per million hl, which is in line with industry analysts’ ‘rule of thumb price’, when establishing green field breweries in China.
Beer produced from the new Tsingtao brewery will battle for market share against local, domestic and international competitors, which in recent years have stepped up their efforts in Henan province.
AB InBev and Carlsberg interest in Henan Jinxing?
As a consequence, beer production in the province is up more than 20% in the first 10 months of 2012, while the breweries together have produced almost 43m hl, around 10% of China’s total.
In the spring of 2011, AB Inbev acquired Henan-based Weixue Beer’s three breweries in Zhengzhou, Gushi, and Xinyang (including the two brands Weixue and Jigongshan), and has earlier been linked to the acquisition of local producer Luoyang Asia Brewery Ltd. Co.
SABMiller and China Resources’ joint venture Snow Breweries has also been very active in Henan in recent years and said in its Q2 financial statement the latter said it had added new production capacity in the province.
Finally, privately held Henan Jinxing, which is Henan’s largest beer producer, continues to look for a strategic partner, which is ready to take a stake of up to 30% of the company prior to a stock market floating. Both AB Inbev and Carlsberg are tipped as potential buyers.
28 Nov. 2012