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.
Malaysia. GAB: Business As Usual Despite Ownership Change
GAB MD Hans Essaadi said despite having a new parent entity, GAB is committed towards its business model which has propelled it to become a leading brewer in the market with a strong product line.
“We also do not expect any rebranding or renaming by GAB post-Heineken acquisition. GAB has always been a local entity. The advantages of being a locally listed company are enormous. Although we have foreign owners and shareholders, we are perceived as a local brewer.
“With the Guinness, Anchor and Tiger brands, we are perceived as a fantastic local brewer and we want to stay that way,” he told The Malaysian Reserve last Friday.
Heineken now wholly owns GAPL, which in turn holds a 51% interest in GAB.
GAB produces and sells a portfolio of beers and non-alcoholic malt beverages including Tiger, Anchor, Guinness and Malta brands.
GAPL, on the other hand, is the licensee for Guinness and ABC Stout distribution for the Singapore market.
GAPL was one of the two joint ventures that Amsterdam-based Heineken had taken control of in a deal worth US$781 million (RM3.38 billion) in October.
Besides GAPL, Heineken also bought a 57.9% stake in Jamaicanlisted Desnoes & Geddes which sells the Red Stripe beer brand.
That purchase effectively raised its stake to 73.3%.
Due to the changes in stakeholding, he said GAB is migrating its information technology system to suit Heineken’s.
“It would keep our people busy in the short term. But we are trying to make the integration as seamless as possible,” he said, adding that the integration requires minor adjustment at the company level.
“Otherwise, it’s business as usual,” he said.
Meanwhile, Essaadi said GAB has inked a long-term brewing and distribution agreement with Diageo plc, for the former to continue brewing and marketing Guinnessbrand beverages.
“The ownership change was a significant step for GAB. But the Guinness products are still very important for us, and Heineken is fully aware of that,” he added.
On projections for 2016, Essaadi said it would be a tough business environment for fast-moving consumer goods (FMCG) companies like GAB.
He said the Goods and Services Tax and political landscape are among the reasons behind the weak market sentiments.
“If you listen to the market, it is telling you that it’s not easy out there. People are quite scared and that depresses consumer demand.
“When we talk to competing FMCG companies, they all feel the pressure,” he said.
However, he said GAB’s business is quite resilient with a strong market position to absorb any drop. GAB recorded a 15.6% year-on-year increase in net profit to RM63.1 million for the first-quarter ended Sept 30, 2015.
The brewer also achieved 3% revenue growth to RM405 million, driven by higher sales and improved cost efficiency.
17 Dec. 2015