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.
India. Kingfisher turns to flavoured malts as beer sales stall
Faced with a prolonged slump in the demand for beer, United Breweries anticipates young drinkers, specially women, will spend more on malts and beers that are flavoured.
“There are enough young above-legal-age people who don’t like drinking beer,” said Samar Singh Sheikhawat, senior vice-president, marketing, United Breweries. “Say women—we have nothing in our portfolio that is for women.”
Indian liquor companies have been swiftly expanding their portfolio of alcopops, with rum and vodka makers such as Bacardi and Radico Khaitan Ltd adding flavours to low alcohol drinks that come in attractive bottles. Still, it’s a fairly small category in India.
United Breweries, which makes more than half the beer sold in India, is trying to fend off rivals such as Carlsberg and AB InBev that have been gaining share in a market that has seen sluggish growth over the past few quarters.
The launch, its second in less than 12 months—it launched a premium version of its Kingfisher Max beer in March last year—is aimed at taking on the Bacardi Breezer. As it has done in markets in Europe, particularly the UK, Bacardi can be credited with building the alcopop segment in India.
“One brand has dominated the market for a decade, there has been no alternative,” added Sheikhawat. The planned alternative, Buzz, will for now be available in two flavours— lychee and berry—in Mumbai, Pune and Thane.
This so-called ready-to-drink, or RTD, market, dominated by Bacardi, is growing at 11-12% annually in India, with roughly two million cases sold every year, according to data sourced from Euromonitor.
Buzz will be made available across India over a period 12 months—the other priority markets are Delhi, Manipal, Chandigarh and Bengaluru. “We will go in markets where there is significant Breezer volume,” Sheikhawat said.
Industry experts reckoned that while the RTD category has been growing, not many companies have invested in it.
“While it is a growth category, specially among the young and affluent, it has inherent distribution challenges,” said a top industry executive who did not want to be named. “Also India is still a small in-home alcohol consumption market, a challenge that has stalled the growth of beer too. So not many companies have been able to persistently pursue the RTD category,” the person added.
In a recent move, United Spirits Ltd (now controlled by Diageo Plc.) rolled back its ready-to-drink brand Smirnoff Ice (a pre-mixed vodka drink) on account of “insufficient volumes”.
The rapid expansion of United Breweries’ portfolio comes at a time when volume growth for the beer industry in general has been tepid although alcohol consumption among Indians is increasing at a rapid pace.
In the first half of 2015, volumes for the beer industry dropped by 1% from the year ago period.
“The beer industry lacked lustre in the first half of the financial year with a 1% drop in volume,” United Breweries said in a statement to the BSE during its quarterly result announcement.
Volumes at United Breweries dropped by 2.4% in the quarter ended 30 September from the same period a year ago, even as margins expanded by 100 basis points on the back of price increases in select markets and stable input costs. One basis point is one-hundredth of a percentage point.
United Breweries’ move to launch more products comes at a time when AB InBev’s planned takeover of SABMiller is set to create the world’s largest beer company, which is likely to impact the dominance of large brewers globally, including in Asian and African markets.
“Yes we have been more aggressive in launching newer products, we have to grow the market,” Sheikhawat said.
20 Jan. 2016