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.
American hangover for AB InBev
AB InBev is not having a great January. Any joy the brewer might have felt after raising $4bn of debt at rates as low as 0.8 per cent this week will have been tempered by regulatory woes on both sides of the Atlantic. In the UK, it was told that it has to share the Budweiser name with rival Budvar. More seriously, in the US it is haggling with regulators over its $20bn acquisition of Modelo, whose brands include Corona.
The big issue is market share – the combined company would have a 55 per cent share of the US beer market by volume. AB InBev’s attempt to soothe regulatory concerns by handing control of Crown Imports (which distributes Modelo’s drinks in the US) to Constellation Brands – limiting the combined market share to 49 per cent – might not be enough. It may also have to give up its option to buy Crown, which can be exercised every 10 years. And if that is not enough, it might have to tweak its supply agreement with Crown or even allow another brewer to produce some of Modelo’s drinks.
Problems with US regulators need not be fatal to the deal, whose benefits rely largely on cost savings in Mexico and wider distribution of Corona. But exports are 40 per cent of Modelo’s sales, and about
two-thirds of exports go to the US, so it is a sizeable chunk of business. Bernstein estimates that being forced to lose some of Modelo’s production could strip $75m out of the deal’s cost savings of $600m. That said, AB InBev has overdelivered on savings promises in the past, so $600m might still be achievable.
Worries about the deal are weighing on the shares. Since it was announced last June, AB InBev has underperformed rivals SABMiller, Heineken and Carlsberg. The company hopes that the deal can be completed in the first quarter of 2013. If the uncertainty drags on, the risk is that the shares will lose more of their fizz.
18 Jan. 2013