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.
Myanmar. Alcohol and cigarette taxes get complex
Next year’s tax rates were approved just days after a special tax law was enacted on January 18. This earlier law, published in state media, provides guidance for taxpayers and government staff, setting out a framework for how items such as cigarettes, liquor, forestry products, cars, oil, gems and jewellery will be taxed in future.
This framework includes more specific rules than have been issued in the past, and aims to reduce tax evasion, said U Kyaw Kyaw, deputy director general at the Ministry of Finance in Nay Pyi Taw.
The framework also details penalties for tax dodgers, and tax breaks for income and commercial tax payers. Specific rates on goods, on the other hand, are included in the 2016 Union Tax Law and will be made public once the law has been approved by the president.
Since 2014, parliament has announced tax rate changes for each fiscal year annually through a Union tax law, which parliament approved unusually early this year.
If approved by the president, the law will take effect on April 1, after the new National League for Democracy-led government has taken power.
U Kyaw Kyaw said parliament passed the law early so as not to burden the new government.
Most taxes will remain the same as last year, to avoid confusion, U Kyaw Kyaw said, though income tax will be cut for those in the lowest brackets, and the tax on raw gem sales will rise to 20pc from 15pc.
Tax on value-added jade and gems products, such as jewellery, will remain unchanged at 5pc.
The most marked change is to taxes on alcohol and cigarettes. The 2016 Union Tax Law includes 16 different rates for alcohol, and six for cigarettes, compared with a single rate for each item under last year’s law.
Taxes on imported alcohol and cigarettes will remain the same as for this year, at 60pc for alcohol and 120pc for cigarettes, while rates for their locally made counterparts will fall.
The lower tax rates for domestically made cigarettes were enacted to ensure clarity, as more foreign investors are now doing business in Myanmar, U Kyaw Kyaw said. “We modified the law to be more specific in some areas, and we wanted to base taxes on market prices to prevent transfer pricing.”
Local cigarettes are currently taxed at the same rate as imported ones, but from April 1, 20-cigarette packs with a market price of K400 will be taxed K60 each. Taxes will rise gradually, depending on price, to K300 for packs costing more than K800 each.
The government had initially proposed a 120pc tax on local cigarettes costing more than K3000 a pack, but the Pyidaungsu Hluttaw’s joint bill committee decided against it.
The government draft law also included nine alcohol tax brackets, but the bill committee finally decided on 16 (see table). These range from K56 per litre of liquor or beer sold for less than K500, to K3375 on each litre sold for K10,001-K20,000. Beer or liquor priced at more than K20,000 per litre, as well as imports, will be taxed at 60pc.
In the draft bill, the Union government had proposed levying a 60pc tax on all beer and liquor sold at more than K10,000 per litre.
The government had also proposed taxing all wine at a single rate – 50pc of the market price – but the hluttaw committee instead came up with 16 different rates for locally produced wine (see table).
The committee made a number of other changes to the original government draft including raising the tax revenue target for the coming year to K2.4869 trillion, adding K1.4 billion to the original figure.
This does not include the income expected to come from a 5pc commercial tax on apartments sold to foreigners under a new condominium law.
The committee also added a provision aimed at encouraging people to disclose their source of income, as proposed by U Win Myint, the Pyithu Hluttaw representative for Hlaing township.
If the source of income can be proved, it will not be taxed if it is spent on buying, developing or starting a business, or buying a property. Those who cannot offer proof will be taxed 15pc on invested income, if their total income is lower than K30 million, 20pc if it is lower than K100 million and K30pc on any additional income.
The only changes to income tax are to the lowest bracket – this year, income of less than K2 million is tax-free, and 5pc tax is charged on income between K2 million and 5 million.
Next year, those earning less than K4.8 million a year will be exempt from paying tax.
Income between K4.8 million and K5 million will be taxed at 5pc, income up to K10 million will be taxed at 10pc, 15pc will be charged on income up to K20 million, 20pc on income up to K30 million and 25pc on anything above K30 million.
The new bill also includes incentives for reporting on tax evasion – 10pc of each penalty collected by the Internal Revenue Department will be paid to the informer, and 20pc to the investigative team. Whistleblower identities will not be made public.
This provision was not included in the government’s original draft of the bill, but was added by the bill committee, with a view to reining in tax evasion, U Thein Tun Oo, Pyithu Hluttaw representative for Mandalay Region’s Amarapura township, told parliament on January 22.
The government continues to struggle with tax evasion.
The Large Taxpayers Office, set up in 2014, has met with some success by holding an annual awards ceremony to publicly congratulate corporate taxpayers, but this approach is harder to orchestrate on a wider scale.
26 Jan. 2016