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.
SABMiller plc Trading Update
Lager volumes for the third quarter were 2% ahead of the prior year and soft drinks volumes were 3% higher, both on an organic basis. Group revenue grew by 8% in the third quarter and group revenue per hectolitre was up by 5%, both on an organic constant currency basis, reflecting selective price increases and helped by improved brand mix in most regions. On a reported basis, including the effect of acquisitions and disposals, total volumes were up 6% and group revenue was up 17% compared with the third quarter of the prior year. Overall, financial performance for the quarter was in line with our expectations.
In Latin America the third quarter saw improved growth, with lager volumes up 6%. Colombia lager volumes grew by 7%, with a price increase taken at the start of December 2012. The growth was supported by the bulk pack introduced in the prior year as well as strong market execution during the peak period, with Aguila Light performing particularly well. In Peru, where we also took a price increase in December 2012, lager volumes were up 6% aided by expanded trade and fridge coverage. In Ecuador lager volumes declined by 1%, impacted by softer economic conditions and increased trade restrictions over the peak period. In Central America lager volumes were up 8%, with a notable performance in our premium brands in Panama. Lager volumes in Honduras were also boosted by growth in our premium brands, while in El Salvador the focus on affordable bulk packs and widened trade coverage resulted in double digit lager volume growth. Soft drinks volumes were up 5%, with increased availability and pack range extensions of our non-alcoholic malt brands.
In the third quarter Europe lager volumes were up 1% on an organic basis, with some beer markets impacted by depressed consumer confidence. Following an exceptionally strong first half, volumes in Poland were down 2% as the quarter was impacted by significantly weakened consumer sentiment although the overall beer market performed better than some other alcohol categories. Czech domestic volumes were down 11%, impacted by the continuing decline in the high value on-premise channel, in which we are more strongly represented, along with the impact of reduced promotional activity and the selective price increases in October 2012. Volumes grew by 23% in Romania driven by the continued strong performance of the new PET pack of economy brand Ciucas. Despite the challenging economic backdrop, volumes were up mid single digits in other European markets. Our associate, Anadolu Efes, delivered total volume growth of 5% on a pro forma basis in the third quarter, with a 7% pro forma decline in beer more than offset by growth in soft drinks of 24%.
MillerCoors domestic sales to retailers (STRs) declined 1.1% in the quarter on a trading day adjusted basis. Premium light brand volumes were down low single digits, as low single digit growth in Coors Light was offset by a mid single digit decline in Miller Lite. The Tenth and Blake division saw double digit growth driven by Leinenkugel’s and Blue Moon. Economy volumes were down low single digits. Domestic sales to wholesalers (STWs) were down 1.4% in the quarter compared with the prior year.
In Africa lager volumes grew by 4% on an organic basis, cycling double digit volume growth in the prior year. Most markets continued to grow strongly. Lager growth of 10% in Zambia continued to benefit from improved availability and distribution networks, further supported by the operation of the new brewhouse at Ndola from November 2012. Uganda returned to growth this quarter with lager volumes up 4% despite a slower economy. In Mozambique the affordable and mainstream segments continued to perform well helping deliver lager volume growth of 9%. Tanzania volumes continue to decline, down 13% for the quarter, following the excise related pricing. In Ghana, volumes grew by 9% driven by a strong performance by the Club brand while South Sudan continued to grow strongly. Lager volume growth moderated to 5% in Zimbabwe following a price increase taken in the quarter as a result of an unanticipated excise increase. Our associate Castel delivered lager volume growth of 5% on a pro forma basis including the combined Angola business. Soft drinks grew by 12% on an organic basis assisted by strong performances in Nigeria, Zambia and Ghana.
Lager volumes in Asia Pacific declined by 1% on an organic basis (which excludes Australia volumes altogether), largely as a result of subdued volumes in China, which declined 3%, due mainly to an exceptionally cold and wet winter across the country. In India, volumes grew by 18% with continued strong growth across the portfolio. There was an improving trend in lager volumes in our Australian business, with sales for the quarter 4% below the prior year on a pro forma basis, excluding the impact of the termination of some licensed brands, compared with an 8% decline in the previous six months. Total lager volumes, including discontinued brands, were 15% down. Flagship brand Victoria Bitter grew by 2%, the first quarter of growth in over 10 years, benefiting from the brand restoration programme and improved retail engagement. The integration programme in Australia remains ahead of schedule in respect of both synergy delivery and capability build.
In South Africa, lager volumes grew by 3% despite a challenging economic and trading environment. In the face of strong competition, the mainstream brand portfolio grew in aggregate with Castle Lager performing particularly well. Castle Lite, our principal premium offering, continued its strong performance with more than 20% growth. Targeted brand investments as well as improved retail execution and customer service continued to have a positive impact. Soft drinks volumes declined by 3% following a price increase on some packs in November 2012, partially offset by growth in still drinks.
On 6 December 2012, the group successfully completed an issue of €1,000 million 1.875% Notes due January 2020 under its US$3,000 million Guaranteed Euro Medium Term Note Programme. The net proceeds were used to repay in part the bank borrowings incurred to finance the acquisition of Foster’s in December 2011.
In January 2013, the group agreed to sell its non-core milk and juice business in Panama to La Cooperativa de Productores de Leche Dos Pinos R.L. (“Dos Pinos”) for a total cash consideration of US$86 million. Completion of the transaction is subject to approval from the Panamanian competition authority.
22 Jan. 2013