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.
Why British beer is huge in China
“We have seen a 16-fold increase in orders from China over the last few weeks, and currently have 50,000 cases of Greene King IPA on a boat to arrive in time for Chinese New Year,” said a spokesman for the venerable Nineteenth Century Suffolk brewer, while one importer revealed having to up their November monthly order from the usual 6000 bottles to more than 80,000 to meet demand.
Chinese media reported the fervour extending far beyond the major cities of Beijing and Shanghai. “Before, we were selling about 100 litres each day. Now we can sell as much as 300 litres,” said the landlord of a pub in Urumqi, capital of the rugged desert region of Xinjiang 2000 miles from the capital.
The Chinese drink around 55 billion litres a year, more than twice as much beer as any other country. And though just a tiny part of this huge market, the £15 million of British beer exported to China marked a 186% increase since 2013. “British beer is growing in profile,” said Elizabeth Truss, British Secretary of State for Environment, Food and Rural Affairs, on a recent trade visit to Shanghai to promote British food and drink. “So there is a massive opportunity to take more market share.”
When local news website Tianshan Net analysed the spike in Greene King sales, it described a “passion and curiosity” for drinkable symbols of British craft and tradition - values esteemed in China. For the country's expanding middle-class, traditional British brews are a distinctive foreign product that contrasts sharply with ubiquitous cheap Chinese lager. And it's a luxury that people are willing to pay up to 40 times more for than a mainstream local lager like Tsingtao.
Chinese students returning from study abroad with broadened beer tastes have added to the fan-base. At Beijing’s Great Leap Brewing pub, for example, younger Chinese drinkers are replacing expats as the main clientele. “Some come, they think, ‘That’s a bit weird’, and leave after one drink - but then they come back the next day, the next week, and bring their friends, too,” a pub spokesman told the Sapore di Cina website.
When a group of British Midlands craft brewers organised trips to China in 2013 to showcase their wares, positive feedback prompted the creation of British Craft Beers Ltd to promote brews from companies like Thornbridge, Castle Rock and Peak Ales. “There is a clear opportunity for sweeter beers, mild and dark stouts and porters,” said founder Richard Worrall.
Interest in distinctive beers has prompted the opening of China's first brew pubs, such as Boxing Cat Brewery and Jackie's Beer Nest in Shanghai, and Great Leap Brewing and Slow Boat Brewery in Beijing. These bars sell a number of British ales - Belhaven Stout, Abbot Ale, Old Speckled Hen and Greene King IPA are all on the taps at Jackie's Beer Nest. They have also pioneered a wave of Chinese craft beers influenced by British traditional brews. Boxing Cat's Southpaw Winter Warmer openly describes itself as an English-inspired malty brown ale, for example.
Bedfordshire's Charles Wells Brewery is another producer creating greater ties with China. “China is a complex market and importation can be quite bureaucratic when compared to other European markets,” says international sales director Tim Sprake. “However, we intend to add further resources over the next 3 years including a new trade mission in the spring of 2016 to cement the next phase.”
Cornwall's St Austell brewery has also leapt on the boat to China. “We actually have a small order on the seas to Shanghai right now,” says export manager Mike Morris. “This first order is more of a trial to see which beers will be received well. The big development overseas generally has been towards the more hoppy IPA styles of beer and we’re well placed with our Proper Job brand. Or we may see our more easy drinking session beer Tribute work well.”
He sees China as a market for slow steady expansion, rather than the sort of out-of-the-blue spikes prompted by Xi Jinping's pint of Greene King IPA. “We expect over time consumers will experiment more, and there will be a wider acceptance of British beers. So while at the moment we wouldn’t expect big orders, it’s important to be there - because undoubtedly it should develop into a significant export market,” Morris explains.
British beers may also benefit as Chinese workers become more interested in tracking down quality drinks that will help them impress important clients. A report in The Lancet earlier this year found “drinking with clients and colleague is seen as vital to career advancement” in China today – and even cited job ads listing ‘good drinking capacity’ as an asset for candidates.
Such cultural shifts play into the hands of British beer exporters. Leading British beer expert Melissa Cole once described British beers as not only “category-defining and iconic” but also “the most sessionable beers in the world.” So perhaps the great British drinking session will be among our most novel 21st century exports to China.
25 Jan. 2016