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.
Thai takeover opens exit door for coveted F&N chairman Lee
Lee, 55, the second son of Singapore's founding leader Lee Kuan Yew, oversaw a bidding war for F&N that led to Southeast Asia's biggest corporate takeover. The deal values the 130-year-old drinks and property conglomerate at around $11 billion and will reward shareholders handsomely.
Despite some friction with Lee's board, there are compelling reasons for Charoen Sirivadhanabhakdi to keep on the astute, well-connected scion as the Thai beer baron looks to unlock value from F&N's drinks business, distribution networks and premier properties.
"He will leave F&N - that's my sense," said Mano Sabnani, a minority shareholder and former senior executive at a Singapore newspaper. "If they wanted him and they asked him then maybe. But Hsien Yang is a very capable chap. For him to get other roles is not a problem."
Lee's future is sure to be a hot topic at a shareholder meeting on Tuesday.
Lee holds 180,000 F&N shares directly, a company filing showed in December, and he is one of three trustees of 408,240 shares held by the estate of Kwa Siew Tee. Kwa is the late father-in-law of Lee Kuan Yew.
Another filing from 2007 shows Lee Hsien Yang bought the direct shares on November 23 of that year at S$5.65 each. At the Thai takeover price of S$9.55 per share, he will make a profit of S$702,000 ($571,600) if he sells to the Thais.
If Lee does leave F&N, the impact will be minimal as the senior management is intact and the business carries on, said a source close to the transaction, speaking on condition of anonymity.
"I'm sure he's considering his options," said the source. "Fraser is a very old brand, so the connections are all there, the management are all there. The business is beyond one individual."
In 2007, Lee surprised the region's corporate world, and his father, with his departure from Singapore Telecommunications Ltd after 12 years as its chief executive.
Lee, who is also chairman of the Civil Aviation Authority of Singapore and a director of bourse operator Singapore Exchange Ltd and Australian and New Zealand Banking Group Ltd , declined to comment or be interviewed.
"He would be one of the sought-after global CEOs, but the question is whether he would like to leave Singapore," said a senior investment banker. "His wife is one of the best lawyers in town... They are a power couple."
Lee's wife Lee Suet Fern is a senior director at Stamford Law Corp, F&N's main legal advisor on the takeover deal by the Thais and the group's sale of its prized Tiger Beer asset to Heineken NV in September.
A SPRINT FORWARD
Lee streamlined F&N's management by naming two CEOs to run the drinks and property divisions as it was difficult to find one person good at both market segments, said Jit Soon Lim, Nomura's head of equity research for Southeast Asia, who has covered F&N since 1997.
"The question is not so much where he ends up but what he wants to do," said Lim. "If F&N is fully privatized, then there is no role for him as a chairman."
F&N's board was exploring options to restructure the group and unlock value even before Charoen's interest accelerated the process, but it would have taken time and carried some risks to execute, said another source who is close to the transaction.
"Here it's a sprint forward, there's certainty and time-value for money," said the source.
"We should not underestimate the contribution of the chairman in this process," the source said. "The value has been realized and the new owner - who has got more money than you know what to do with - has to decide which is his best team."
A spokesman for both TCC Assets Ltd and Thai Beverage PCL , through which Charoen is buying all of the F&N shares that he does not already own, declined to comment on their plans for the Singapore conglomerate.
Charoen and Lee have been in close contact, but relations have not always been smooth since the Thai magnate lost out to Heineken and turned his attention to F&N itself.
Last year, Lee played the role of mediator as Charoen's battle with Heineken over Asia Pacific Breweries Ltd risked turning ugly, taking a call from the Thai billionaire in mid-September, sources close to the deal have said.
After that conversation, Charoen called Heineken to say his group would accept the Dutch giant's bid to buy F&N and other shareholders out of the Tiger beer maker, leaving the Thais to go after F&N's soft drinks and property businesses.
But Charoen shot down the F&N board's proposal to pay S$4 billion to shareholders as he prepared to bid for control.
The board's decision to agree to a break fee for a rival bidder - a consortium led by Indonesian tycoon Stephen Riady's Overseas Union Enterprise Ltd - also did not sit well with the Thais, two sources with direct knowledge of the matter said.
Lee, who was paid S$1.59 million last year, heads a nine-member F&N board that is a diverse group of powerful people.
They include Hirotake Kobayashi, managing director of Japanese food and drinks company Kirin Holdings Co Ltd <2503.T>, which owns about 15 percent of F&N and backed the Riady-led counter-bid.
Other prominent F&N board members are Timothy Chia, the Asia chairman of Coutts & Co Ltd, Tan Chong Meng, group chief executive of PSA International, one of the world's largest port operators, and Maria Mercedes Corrales, a former senior executive at Starbucks Coffee Co and Levi Strauss & Co in Asia.
The current board could be embraced by Charoen, minority F&N shareholder Sabnani said, "but my feeling is there are going to be major changes."
29 Jan. 2013