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4-2017

Global hop market

A 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 Russia

Germany 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.

SABMiller’s Chinese Partner Said to Seek Pitches on Snow Beer JV

China Resources Beer (Holdings) Co. will soon ask investment banks to pitch for a role advising on options for its Chinese brewery joint venture with SABMiller Plc, people with knowledge of the matter said.

The state-backed company is seeking advisers as it weighs a potential purchase of all or part of SABMiller’s 49 percent stake in China Resources Snow Breweries Co., maker of the world’s best-selling beer, the people said. China Resources has told banks it will send out a formal request for proposals as early as this week, the people said, asking not to be identified as the information is private.

Anheuser-Busch InBev NV may need to sell the stake in the brewer of Snow lager to secure Chinese antitrust approval for its 73.5 billion-pound ($110 billion) acquisition of SABMiller, which will create a beermaker controlling about half the industry’s profits. SABMiller’s stake in the Chinese venture could fetch as much as $3.6 billion, Nomura Holdings Inc. wrote in a Nov. 16 research report.

“China Resources has already learned enough from SABMiller about how to operate a beer factory effectively and now can manage it by itself,” Charlie Chen, an analyst in BNP Paribas SA in Hong Kong, said by phone Monday. “China Resources may buy the stake with another Chinese local beer firm.”

Shares of SABMiller reversed earlier losses to close up 0.1 percent at 40.315 pounds in London on Monday. China Resources shares fell 0.8 percent to HK$14.96 at 10:57 a.m. Tuesday in Hong Kong.

Best Seller

China Resources aims to pick advisers by the end of the year, the people said. AB InBev hasn’t yet decided whether it will sell the stake, and China Resources isn’t set on any particular course of action, the people said.

Several banks have reached out to China Resources in recent weeks to offer financing for any potential buyout of the Snow joint-venture stake, according to the people. China Resources is seen as the logical buyer if AB InBev decides to sell, as it has a right of first refusal, the people said.
Representatives for AB InBev, China Resources and SABMiller declined to comment.

Beer sales in China will expand 41 percent in the five years through 2019 to reach 683 billion yuan ($107 billion), according to a June report from research firm Euromonitor. SABMiller said its Chinese beverage volumes declined 3 percent in the first half of its fiscal year due to crimped consumer spending, even as China Resources Snow outperformed the market.

Snow beer, which had a 23 percent market share in China last year, outsells all other beers globally, Euromonitor data show. The partnership between SABMiller and China Resources, which began with two breweries in 1994, operates more than 90 breweries across China and employs more than 59,000 staff, according to SABMiller’s website.

14 Dec. 2015

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