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.
Singapore. Splurging billions on Peroni and Grolsch may not be the smartest move for F&N
Analysts are wary over Fraser and Neave’s involvement in the EUR3 billion sale of premium European beer brands Peroni and Grolsch.
A report by DBS said that FNN’s interest in Peroni and Grolsch is surprising, as analysts had the impression that the group will simply focus on expanding its presence in the ASEAN.
“We are a little mixed on this development at this stage. On the surprise factor, we had the impression that the focus of FNN/ThaiBev would be more on ASEAN region. That said, we believe the intention is to leverage on the Peroni and Grolsch European brands to launch into this region if it was successful,” DBS said.
The report added that FNN might be looking to claw back its beer profits, which vanished after the divestment of its stake in Myanmar Brewery Limited.
“We believe the intention was to leverage on FNN for international expansion, while ThaiBev’s focus remains within Thailand. Although the ThaiBev/ FNN group has a presence in the region, an established beer distribution network is currently only in Thailand (Chang), coupled with export presence in Singapore and Myanmar. It remains to be seen if FNN will be able to significantly ramp up the introduction of the brands within short span of time in the region,” said DBS.
Despite its misgivings, DBS believes that Peroni and Grolsch’s price tag is not excessively high. If the bid pushes through, FNN is likely to fund the acquisition using a mix of internal cash, debt and equity.
“Based on our initial estimates and assuming a price tag of EUR2.5bn (S$3.75bn), we believe FNN is likely to rely on a mix of funding, about 53% debt (S$2bn), 25% equity (S$950m) and 21% cash (S$800m). This is likely to bring FNN’s net gearing to 0.6x (post assumed equity issuance) with a Debt/ EBITDA of under 4x,” said DBS.
4 Feb. 2016