The beer market dynamics in Russia is approaching zero, yet major brewers are divided into those who developed considerably in 2017 and those who considerably reduced their volumes. For instance, company Efes has managed to substantially extend their sales due to restrained pricing policy and activity in the modern trade. Heineken has also demonstrated an excellent performance promoted by significant increase of advertisement budgets launching a non-alcohol sort of the title brand and unusual activity in the economy market segment. Carlsberg and AB InBev have been focusing on margins and lost a market share of their inexpensive brands. Serious dependence on PET package and mass enthusiasm about Zhigulevskoe have negatively impacted the most of big regional brewers, that have been for the first time pressed by the leaders in the key sales channels, especially in Volga and Central regions. In the small business there has been a noticeable slowdown in appearing of new restaurant breweries, yet the number of craft breweries has been growing rapidly. In 2018, the beer market is likely to grow a little, while the share of AB InBev Efes may decrease due to the integration. ...
“Catalogue of Russian Beer Producers 2018” includes 1070 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft microbreweries.The catalogue includes 32 large breweries, 75 regional breweries, 693 industrial mini- and microbreweries as well as 270 restaurant breweries. ...
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.
The Second Craft Beer Revolution: Will it Stick This Time?
There were just a few hundred people in attendance, but it had the aura of a circus. (In fact, Brewers Association chief Charlie Papazian appeared on stage in a clown outfit. I can’t remember why.) When Charlie asked for a show of hands of who was planning on getting into the beer business, about half raised their hands. Later, Boston Beer Co.’s Jim Koch practically pleaded with the crowd to remember to put code dates on their beer and make sure it’s fresh. I think he foresaw what was coming, but I don’t think most people had a clue of what he was talking about.
The exuberance and electricity in the air were palpable. Craft beer was hitting the national radar, and rags-to-riches stories abounded. Since 1985, the craft beer segment had not experienced less than 20 percent growth per year. In fact, for most of the years between 1985 and 1997, volume was up 40 to 60 percent, and in 1987 it was up more than 100 percent. These were heady numbers, and everybody from disenchanted Wall Street financiers to burned-out engineers to young get-rich-quick swashbucklers was looking longingly at our little industry.
Pete Slosberg of Pete’s Wicked Ale was our god. He signed a baseball for me. I can’t think why. Our distributorship acquired the rights to his brand in Houston and then proceeded to ride that brand to amazing heights, rivaling Sam Adams, only to then ride it down again until he sold the brand to The Gambrinus Co. in 1998, which discontinued it last year.
I also met Andy Klein, who started a contract brewery called Spring Street Brewery, which made Wit Beer. He later succeeded in creating Wit Capital, an online investment bank that sold shares directly to the public over the Web. Eventually Wit Beer faded away, but he sold Wit Capital for millions.
There was a hot beer that year called Rhino Chasers. It too faded away. Anheuser-Busch was soon to introduce a red amber beer called Red Wolf. Yep, it faded to obscurity. I met yet another guy who was funding his beer on the Vancouver stock exchange as a penny stock. It was contract brewed, naturally. It is not available anymore.
What we didn’t know back in 1994 was that this euphoric craft beer bubble was about to burst. The 40 high-volume increases we had seen since 1985 were to turn into a 1 percent gain in 1997. The frenzy of new contract-brewed brands had hit a fever pitch, and people were shipping beer to distributors regardless of demand. Suddenly, beer of questionable taste and quality started backing up the supply chain until distributors and retailers said “no more.” Shipments were refused and a shakeout ensued. Strong brewers continued to grow, but others fell like flies.
Too many microbrewers sailed too close to the sun, and their wings melted, sending them crashing back to earth. Or more like flies getting too close to one of those electric fly zappers. Or something.
Many folks are drawing parallels between today and the mid-1990s. There are now almost 2,000 craft breweries with another 1,000 being planned. People are flocking into the industry. Bankers are lurking in hallways at the CBC.
Will we see a repeat of this as capacity grows and 1,000 new brewers come online? I don’t think so. First of all, we aren’t seeing the 40 to 60 percent growth we saw back then. More like 9 to 12 percent today. Craft beer’s Cameron Diaz legs of 1995 are today more like Sissy Spacek legs—still not bad, but they’ve got some maturity, and only serious fans find them attractive. That’s sustainable as more and more young people enter the market and prefer more flavorful beers. And we don’t have as many charlatans entering the space. Distributors have proved to be pretty decent gatekeepers. They are more careful about whom they take on their book. The beer must have a good story, somebody who is passionate about it and excellent quality to even get a seat at the table. Distributors today, many of whom were burned with worthless inventory in 1997, are more careful about whom they’ll do business with. Retailers, too.
But aside from the industry controls, there is also an important consumer component today that did not exist in 1996. They did not have the digital tools we have today. They didn’t have Facebook or Twitter. These are automatic controls that will keep what Jim Koch refers to as “science experiments” off the shelves.
In fact, I think that Charlie Papazian’s recent prediction of craft beer reaching a 10 percent market share in a few years is a pretty safe bet. With all the new brewing capacity coming online—not only with Sierra, New Belgium, Lagunitas, Oskar Blues, SweetWater, Dogfish Head, Ninkasi, Bell’s et al, and with new breweries being completed—I think more than a share point a year is a slam dunk. Brewers Association director Paul Gatza estimates 3 million more barrels of capacity is in the planning stage, and that’s just what’s publicly announced. Craft brewing grew 1.3 million barrels last year. So all that math adds up to capacity keeping up with demand for the next two or so years, provided demand keeps growing at the same pace it is today. In the near future, if the demand curve continues in its current trajectory, there will likely be even more investment in capacity, to the tune of more than $1.5 billion.
Bottom line: Yes, I think it’s definitely possible for craft to hit a 10 percent share by 2017, if not probable. The main impediment to reaching that goal in my mind would be the competing growth rates of the Big Brewers’ craft brands (Blue Moon, Shock Top, Leinie’s, Goose etc.), which are not in the BA’s definition of a craft beer. This craft-beer revolution is different. The people I see entering the industry, for the most part, are actually interested in the beer. They may be bankers or plumbers, but most of them are also homebrewers, or they really care about making good beer. Imagine that.
It takes me back to the lunch I had with legendary Belgian brewer Pierre Celis in 1994 in Austin. A genial man with a small frame, Celis was just glad to be back in the brewing industry. When his brewery in Belgium burned to the ground, he regrouped and chose Austin, Texas, for his next brewery and made an excellent wheat beer before it was popular. He told me, “Harry, this revolution in beer will only be sustainable if we make beer for the right reasons. And the only right reason to make beer is to make great beer that you’re proud to serve to your friends and like to drink yourself.”
24 Jan. 2013