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.
Malaysia. Quick revenue boost from lifting of Labuan tax-free status
By rough estimates, Yeah Kim Leng, economist and dean at the school of business at Malaysia University of Science and Technology says the Government could potentially reap “a couple of hundred million ringgit” a year by taxing alcohol sold in Labuan.
“In the bigger picture, the impact is not that great but it will help in enhancing overall revenue,” he says.
Additionally, the move to tax Labuan alcohol will also help plug leakages and minimise contraband issues, he points out.
“What is more important, however, is that the Government must strike a balance between revenue enhancement and reining in its spending,” Yeah tells StarBizWeek.
According to industry sources, the amount of alcohol that is shipped into Labuan, located off the coast of Sabah, is more than what is sold in the entire Southern and Central Peninsular Malaysia.
This has led to many instances where smuggled alcohol as well as cigarettes from Labuan had found their way into Peninsular Malaysia.
Based on government data provided, the 2015 estimated figures for excise duty (before taking into account tax changes) imposed are RM122.2mil (for manufactured liquor), RM1.2bil (for beer from malt) and RM1.1mil (for wine).
These compare to the total estimated revenue gained from all excise duties for 2015, which stands at some RM9.4bil.
In terms of sales tax that the Government is estimated to have gained last year, it is RM4.03mil (for liquors) and RM20.6mil (for beer from malt).
Meanwhile, Nomura South-East Asia economist Euben Paracuellesm concurs with Yeah in saying that measures to increase government revenue must be accompanied by steps that “improve tax administration efficiency”.
“There’s little room for raising taxes at this point.
“Measures (such as lifting Labuan’s tax-free status for alcohol) will help raise revenue marginally but these should also be accompanied by steps that improve tax administration efficiency,” he stresses.
Paracuellesm believes that although Malaysia’s growth is slowing, it remains resilient and hence does not need rate cuts to boost growth.
“We see Bank Negara holding the policy rate steady this year.”
The Government had assumed crude price to be at US$48 per barrel when it mapped out the Budget 2016.
Oil prices have since dropped to below US$30 per barrel and could dip further, hurting government revenue which is derived substantially from oil.
The Government will announce the revised budget, which will incorporate measures to boost revenue next week and hopefully also address its issue of a ballooning operating expenditure and persistent budget deficit.
Labuan alongside Langkawi and Tioman are currently designated as tax-free zones.
Back in 2011, it was reported that Finance Ministry officials had brought up to the Cabinet the issue of widespread smuggling of cigarettes and liqour that had caused the Government to suffer massive losses.
This in turn had prompted the Finance Ministry to examine the viability of Labuan’s duty-free status. However, no action was taken.
Away from these tax-free zones, beer and stout sold in Malaysia continue to have the highest excise tax rates, according to information on the Confederation of Malaysia Brewers Bhd website.
The confederation which is made up of the two key industry players who contribute over 90% of the total beer and stout volume in the market, namely Carlsberg Brewery Malaysia Bhd and Guinness Anchor Bhd, notes that following three consecutive tariff hikes (2004 to 2006), Malaysia has the second highest duty on beer in the world after Norway.
The excise duty for beer is RM7.40 per litre with an additional 15% ad varolem tax.
26 Jan. 2016