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.
Analysis of beer market in China (on Russian)
Beer market of Ukraine: big three losing weightIn 2016, fast increase of excises and resulting price spike stood in the way of the beer market stabilization. Most of competition (as well as mass sorts) moved to the economy segment of the market. The biggest losses were incurred by the leading three, especially Obolon, which again experienced pressure after reallocation of Efes market share. However, one should already speak of TOP-4. Group Oasis CIS (PPB) became a strong player and competitor to transnational companies. Besides the net sales of many regional medium breweries look rather good and 16-fold cost reduction wholesale trade license for craft brewers opens up a possibility of rapid growth in 2017.
Norway sheds light on ‘dark’ – ad-free – beer marketing
That is because as Norway’s biggest beer producer, Ringnes has great experience of operating in a “dark market” – a situation where little or no advertising is allowed. The visiting executives have come from the Carlsberg Group, Ringnes’s owner, which is about to see Russia, representing about 40 per cent of group sales, plunged into a dark market.
“We have had a few people coming to Norway to see how it works in a real dark market,” he says in his office in Oslo.
His message is a reassuring one to the worried executives: A dark market is good for dominant players. “If you have a strong portfolio it is difficult to attack you,” he says. “Launching something totally new with just the product itself and not being able to tell any kind of story is very difficult.”
For Carlsberg, the leading beer brand in Russia with nearly 40 per cent market share, that is welcome news. Russia was meant to be the promised land for the Danish brewer, which in recent years has taken full ownership of Baltika, a St. Petersburg-based company that is Europe’s leading beer brand.
But regulations designed to crack down on excessive and underage drinking, combined with the financial crisis and poor barley harvests, caused Carlsberg’s sales, profits and market share to tumble in the country and investors to query its strategy of concentrating so heavily on Russia.
The marketing ban – TV and Internet advertisements have been outlawed since the summer, and print advertising will be illegal from Jan. 1 – represents a second wave of regulatory tightening.
But using some of the tools developed in Norway, Carlsberg has fought back to record three consecutive quarters of increasing market share.
“I am very pleased with the trends we have been seeing in Russia. We did a lot of work to change the business model and it is good to see that we are getting the benefit from it,” says Jorgen Buhl Rasmussen, Carlsberg’s chief executive.
Carlsberg’s market share, which slipped from about 40 per cent in 2010 to 37 per cent at the end of 2011, was 38.9 per cent in the third quarter.
Its three biggest competitors in Russia – SABMiller PLC, Anheuser-Busch InBev SA and Heineken NV – each have about 15 per cent of the market and will be similarly affected by the ban.
The most important area Mr Roed points to is design. “We spend quite some time and quite some resources on developing the perfect packaging and the perfect design for these products,” he says. “It is the one lever we have. But in my opinion it is the most important in any fast-moving consumer goods [market]. People tend to give TV commercials and advertising too much weight.”
So in Norway the recent launch of a one-litre can for Ringnes proved to be a big success, and Mr Roed places a lot of attention on what is written on the front and back labels. Similarly in Russia, Carlsberg has benefited from introducing products such as 2.5 litre plastic bottles and multipacks. New product launches accounted for 15 per cent of its Russian volumes in the year to July.
Mr Buhl Rasmussen points to the introduction of Holsten, one of its many brands, in Russia shortly before the ban takes effect. “It is important to establish products before the ban … I always prefer not to have an advertising ban. But if it happens we normally see the leader, the best known, benefit more than the complete unknowns.”
Denis Sherstennikov, head of marketing for Baltika, highlights several things the brewer has done. It has introduced new designs for beer fridges in shops with special sections for new products, and has relaunched Tuborg successfully. Baltika was also able to conduct limited marketing, such as its sponsorship of the 2014 Winter Olympics in Sochi.
Carlsberg still faces big questions in Russia. Besides the advertising ban, tax increases will raise the price of beer and questions remain about its dependence on a single market. But Mr R?ed at least has good news about the financial aspects of being in a dark market.
“Norway is still a profitable market. It hasn’t been destroyed by promotions,” he says. “The margins in this market are much better than they are in other markets having a much more liberal policy.”
8 Jan. 2013