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.
AB InBev Rolling Out Black Crown for 2013
With an alcohol content of 6%, Black Crown will pack more of a punch than the standard brew's 5% and is scheduled to go on sale in the United States early next year.
(See Related Content below for previous CSP Daily News coverage of Project 12).
Attention-grabbing drinks are becoming more important for global brewers such as AB InBev as they seek growth in the face of competition from craft beers, wine and spirits, said the report. Changing the attitude of consumers toward established brands and keeping them interested is proving crucial.
"Black Crown's bringing Bud to a more sophisticated crowd and occasion," AB InBev chief marketing officer Miguel Patricio told the news agency. While the main purpose of innovation is to boost sales, it is also about creating "better brand health," said the 46-year-old executive, who started in the position in July.
AB InBev, created in 2008 when InBev NV bought Anheuser-Busch Cos. for $52 billion, has spent the last four years selling assets, stripping out costs from the combined business and paying down debt, the report said. Now, with the help of new brews including Bud Light Platinum and Bud Light Lime-A-Rita, the Leuven, Belgium-based brewer is honing its focus on selling more beer.
"When we bought A-B, our focus was much more on deleveraging," said Patricio. "This is behind us. Now we're focusing on what we've been seeding" in new products.
AB InBev has been struggling to stem declines in Budweiser sales and boost Bud Light revenue in the U.S., the world's second-biggest beer market. Sales of Budweiser to U.S. retailers fell 6% by volume in the nine months through September.
About 6% of AB InBev's beer volume globally last year was the result of innovation and "renovation initiatives," Patricio said. Bud Light Platinum, a higher-strength beer in a blue bottle, and the margarita-flavored Lime-A-Rita were introduced this year and helped add about 0.75 percentage point to the brand's 21.5% share of the U.S. market in the third quarter, AB InBev estimated.
"Platinum was by far the biggest source of growth for ABI in the last three months," Trevor Stirling, an analyst at Sanford C. Bernstein, said in a Dec. 11 note cited by Bloomberg.
For AB InBev, innovation isn't just about new brews, Patricio said. It's also about packaging and marketing initiatives.
AB InBev plans to introduce a new Budweiser can with a distinctive waistline shape in the United States, and has added different sized and shaped cans globally, including a red-and-gold dragon-patterned bottle in China to celebrate Chinese New Year. New Brahma cans in Brazil enable the entire lid to be peeled off instead of just a tab, creating a ready-made beer glass.
"We're feeding this funnel of innovation constantly," Patricio said, adding that new products typically take three or four years to develop.
Renovating or designing new varieties of established drinks, such as Stella Cidre and Lime-A-Rita, is more important than creating entirely new brands, though the company isn't avoiding the latter, Patricio said.
Known for its prowess in reducing costs, AB InBev is also seeking to sell more profitable drinks, said the report. Bud Light Platinum is priced about 35% higher than Bud Light, according to Stirling.
Still, the brewer is resisting cuts to sales and marketing spending, which climbed 7.7% in the first nine months of 2012, after rising 4.1% a year earlier. Patricio declined to comment on whether spending will continue to rise.
The executive told the news agency it is easier to be agile with innovation and marketing in the digital age because of better and faster consumer feedback. AB InBev is soliciting ideas from customers through the "open innovation" section of its website and is using technological innovation around gigs and sports events to drive interaction through social-media websites such as Facebook.
"It's much easier to make consumers loyal when they experience an event" with a company, Patricio said.
That's not to say that AB InBev has perfected the process. Profit this year was hurt by higher distribution and administration costs in the United States as the brewer struggled to keep up with demand for Platinum and Lime-A-Rita, which required extensive--and expensive--countrywide distribution.
"We have to be better" at planning, Patricio said. Still,"I wish we had that problem everywhere--of having innovation be so successful."
8 Jan. 2013