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.
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.
SABMiller China Venture to Pay $851 Million for Brewery
China Resources Snow Breweries Ltd., which SABMiller co- owns with government-backed China Resources Enterprise Ltd. (291), will acquire Kingway’s production and sales business, including seven breweries, according to a statement today. The transaction price includes about $33 million worth of loans.
“Kingway is currently loss-making, but we believe we made a right decision,” Chen Lang, chairman of China Resources Enterprise, said at a press conference in Hong Kong. “About 50 of our 80 breweries came through acquisitions. We have a track record of turning things around in three to five years.”
Kingway, based in Guangdong, put the assets for sale in January last year as it lost market share in its home province to competitors including Tsingtao Brewery Co. Kingway said last week it expects to report a loss for the second half of 2012, after recording losses of HK$101.6 million in the first six months. The stock closed 1.5 percent lower at HK$3.28 today, giving the company a market value of HK$5.61 billion.
SABMiller’s shares rose as much as 1.6 percent to the highest price on record and were up 1.4 percent at 12:15 p.m. in London, giving the world’s second-biggest brewer a market value of about 51 billion pounds ($80.4 billion).
China Resources, the maker of Snow beer, struck a deal after Kingway stumbled in an earlier attempt to sell the business. The company had drawn an offer from Anheuser-Busch InBev NV (ABI) last year, and Beijing Yanjing Brewery Co. was near an agreement to buy the assets in April, people with knowledge of the matter said at the time.
“The Kingway acquisition appears to be rather expensive, considering Kingway’s assets and production capacity,” Anson Chan, a Hong Kong-based analyst at KGI Asia Ltd., said by phone. “It will not change the competition landscape in Guangdong, as Snow is likely to remain the number three brand in the region, lagging Tsingtao and Zhujiang Beer. I also don’t see much cost- saving synergy in the deal,” Chan said.
Brewers like SABMiller are seeking to expand in faster- growing emerging markets as sluggish economies and government cost-cutting measures offset improvements in the beer market in Europe. AB InBev, the world’s biggest brewer, agreed to buy the rest of Mexico’s Grupo Modelo SAB last year for $20.1 billion in the second-biggest beer deal of the last decade, while Heineken NV (HEIA) took control of its Asian joint venture for S$5.6 billion ($4.5 billion.)
China Resources’ Snow, the No. 1 beer brand in China, had a 22 percent market share last year, according to Euromonitor International, a London-based research firm. Shares of China Resources fell 1.1 percent in Hong Kong before the announcement.
The transaction will add 14.5 million hectoliters of beer production capacity, SABMiller said today. The company’s venture with China Resources operates about 80 breweries in the country, it says on its website.
5 Feb. 2013