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.
Vietnam. Brewer Sabeco not selling majority stake to foreign players
After Sabeco’s IPO eight years ago, the state still owns the controlling rate of 89.59 per cent in the company and is looking to unload over 51 per cent of Sabeco’s equity. Dutch brewing firm Heineken is currently the only foreign large shareholder at the Vietnamese beer major, has a five per cent stake.
However, Sabeco does not want to sell the next batches of shares to foreign companies if the Ministry of Industry and Trade divests, the local newswire ttvn.vn reported discussion during a recent ministry meeting.
DEALSTREETASIA had earlier reported that the share sale for the brewer had been planned to be executed either in two tranches, or in a single tranche worth some $1 billion, to reduce the state ownership to 36 per cent. The government values Sabeco at roughly $2 billion through the divestment.
Vo Thanh Ha, Sabeco chairman, reportedly proposed the government to space the sales by at least a year so that production could stabilise, considering the transfer of such large amounts of shares affecting its performance.
Ha also asserted that the role of privatisation had been pale in Sabeco, where IPO was not for the purpose of fundraising, while the company has always had in place latest production technologies, the Bao Dau tu cited him. In terms of management capacity, the progress Sabeco had made was not resulted from privatisation, Ha reportedly added.
As the local largest beer producer wants to retain its own brand, government officials are concerned that it is the major hurdle to the privatisation process of this state-owned business. While the foreign investors interested in Sabeco are all players in the same industry (namely Thailand’s Singha Corp and Thai Beverage Group, Asahi Breweries from Japan, SAB Miller from the US and Heineken, which is already a Sabeco stakeholder), domestic bidders are experts in the real estate and financial sectors.
“We should be cautious when working with large firms. Cooperation in the same industry can be beneficial, but the threat is that we might soon lose our brand. By all means, annexationism always exists in the business method of large companies,” Sabeco’s former chairman Phan Dang Tuat told the company’s shareholders at a mid-year meeting.
The beer maker eyes strategic investors who do not directly compete with it.
As the largest beer consumption country in Southeast Asia, this market in Vietnam is estimated at $3 billion with an annual growth of 15 per cent. Several international beer firms have been present in the country to enjoy fruitful development and threaten the position of domestic players like Sabeco and the Hanoi Beer Alcohol and Beverage Corporation, or Habeco.
Vietnam Brewery Limited, for example, earned nearly VND6.5 trillion ($288.5 million) profit in 2014, far surpassing VND3.9 trillion of Sabeco, although sales of the provider of Heineken and Tiger brands for the year accounted for only 70 per cent of the Vietnamese brewer, which had the leading market share of 46 per cent, according to Euromonitor International.
Consolidation has also taken place in the country, most lately seeing Japanese Sapporo’s wider reach by fully acquiring its Vietnam-based facility from the Vietnam National Tobacco Corporation.
Carlsberg is also an active brand in this area, having forged joint ventures with Viet Ha Beer, Ha Long Brewery and Beverage and Habeco; and taken over Huda Beer, a brand focused on the central region of Vietnam.
Meanwhile, later comers include AB InBev, which is involved in a formal merger with SAB Miller to help it exploit potentials in markets outside the US. AB InBev is running a brewery in Binh Duong province. In addition, Taiwan Tobacco & Liquor Corp targets to open a factory in Vietnam through partnership with Sapporo Vietnam Co Ltd.
25 Dec. 2015