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.
Suntory to list food and soft drinks unit in up to $6 bln IPO-sources
* Japan IPO will raise 400-500 billion yen - sources
* Funds to be used for overseas acquisitions - Nikkei
By Emi Emoto
TOKYO, Dec 12 (Reuters) - Japan's Suntory Holdings Ltd plans to raise up to $6 billion in an initial public offering of its food and non-alcoholic drinks unit, said people with knowledge of the matter, as it looks to build funds for overseas acquisitions.
Japanese drinks firms including Suntory, Kirin Holdings Co Ltd and Asahi Group Holdings Ltd have aggressively chased expansion abroad, including through acquisitions, to be less dependent on a shrinking home market.
The maker of C.C. Lemon soft drinks and Yamazaki single malt whisky aims to more than double sales at the food and beverages unit, which does not include alcohol, to 2 trillion yen ($24.3 billion) by 2020 from 960 billion yen last year.
Suntory Beverage and Food Ltd plans to list in Tokyo in the second half of 2013, raising 400-500 billion yen ($4.9 billion-$6.1 billion), said the sources, who did not want to be identified as the plan was not public. The Nikkei newspaper earlier reported that unlisted Suntory would use the IPO funds for overseas acquisitions.
"Many of the European consumer staples have been struggling in their home markets ... and as a result there may be fire sales," said a consumer goods analyst at a foreign investment bank in Tokyo, who declined to speak on the record as the bank doesn't cover Suntory.
Britain's Sunday Telegraph newspaper reported last weekend that Diageo Plc and Suntory held talks about a joint $10 billion bid for Jim Beam bourbon maker Beam Inc, and the Japanese group has also been reported to have an interest in Danone SA's water business.
So far this year, Japanese firms have spent a record $83.8 billion on outbound mergers and acquisitions, one fifth more than a year ago, according to Thomson Reuters data.
CHANGES AT HOME
Japan's ageing population, uncertain long-term outlook and constant deflation have weighed on a fragmented beverage sector, increasing talk of consolidation as leading consumer goods firms chase market share. Japan's beer market shrank by more than 15 percent in volume shipments in the last decade.
Earlier this year, Asahi completed a $1.5 billion deal for milky drink maker Calpis, and Sapporo Holdings Ltd last year paid more than $500 million for canned beverage maker Pokka Corp, in two of the larger recent domestic drinks deals.
With Japan sales likely to be pressured further on government plans to increase the sales tax to 8 percent in 2014 and to 10 percent in 2015, from 5 percent now, restructuring is more likely, increasing investor interest in Suntory.
"This is just an assumption, but, for example, if Suntory considers buying businesses which do not overlap theirs, such as (Japanese) milk beverages and canned coffee, and sees it as part of its growth strategy, (the stock) would be interesting," said Yasuo Sakuma, chief executive of Bayview Asset Management, which had 130 billion yen ($1.6 billion) of assets under management as of end-September.
Suntory, Japan's No.2 soft drink maker behind local bottlers for Coca-Cola Enterprises Inc, explored a merger with Kirin before talks broke down in 2010.
SUNTORY TO KEEP STAKE IN UNIT
Suntory, which traces its roots to the late 19th century and a small Japanese wine production business, grew in the 1920s with the country's first malt whisky distillery, and began brewing beer in the 1960s. The Osaka-based firm bought soft drinks maker Orangina Schweppes for more than 300 billion yen in 2009, and a year later acquired the Western Europe rights to the Sunny Delight fruit drink. Last year, it entered into a joint venture with Indonesian food and beverage group GarudaFood.
The food and non-alcoholic beverages business accounts for around half the group's total sales, according to the company's website. At end-June, the group had cash and deposits of 225 billion yen ($2.73 billion).
After the IPO - which would be Japan's biggest since Japan Airlines' $8.5 billion re-listing in September - Suntory plans to retain a sizeable stake in Suntory Beverage and Food, whose businesses include making tea and juices and distributing PepsiCo Inc beverages and chilled drinks for Starbucks Corp, the sources said.
Asked about the possible IPO, a Suntory spokeswoman said nothing had been decided.
Japan has seen 47 IPOs so far this year, raising $11.5 billion in total, with JAL accounting for nearly three-quarters of that. In the same period, Asia IPOs, excluding Japan, totalled $38.1 billion, less than half year-ago levels, according to Thomson Reuters data.
12 Dec. 2012