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.
Analysis of beer market in China (on Russian)
Beer market of Ukraine: big three losing weightIn 2016, fast increase of excises and resulting price spike stood in the way of the beer market stabilization. Most of competition (as well as mass sorts) moved to the economy segment of the market. The biggest losses were incurred by the leading three, especially Obolon, which again experienced pressure after reallocation of Efes market share. However, one should already speak of TOP-4. Group Oasis CIS (PPB) became a strong player and competitor to transnational companies. Besides the net sales of many regional medium breweries look rather good and 16-fold cost reduction wholesale trade license for craft brewers opens up a possibility of rapid growth in 2017.
China’s brewers face an unfamiliar challenge — sinking sales
Chongqing Brewery, owned by Denmark's Carlsberg, has started shutting down production facilities and liquidating subsidiaries. The largest brewer in China, China Resources Beer is slashing its advertising budget.
In Chongqing, an inland industrial city, Chongqing Brewery has decided to close two sales and production sites. The sites account for around 3% of its total sales. Decrepit facilities have made them money losers.
The company has also stopped production at a wholly owned brewer in Anhui Province. Anhui Jiuhuashan will continue to make its beer at another brewery.
Chongqing Brewery expects to log a net loss of 58 million yuan ($8.82 million) for fiscal 2015, which ended Dec. 31.
Meanwhile, both CR Beer and Anheuser-Busch InBev, the Belgian beverage giant that controls the third-largest share of the Chinese market, are trimming ad spending. The two companies have decided against taking part in annual auctions for commercial slots in popular programs aired by state-run China Central Television, known as CCTV.
Ad slots during CCTV's high-rated shows cost around 100 million yuan, on average. Fees can run as high as 370 million yuan. CR Beer and Inbev used to be regular advertisers on the network.
Tsingtao Brewery, the No. 2 player in the Chinese beer market, has slashed its spending on CCTV ads to 42 million yuan, down from 185 million yuan last year.
After the binge
For many brewers in China, this is the first time they have had to worry about sagging sales. For decades, the market expanded steadily - often briskly - powered by the country's economic growth.
To capitalize on the surging demand, big players swallowed up small ones. At one time, China was crowded with some 800 brewers; today, the top five companies control more than 70% of the market.
But the flagging economy is taking a toll, as is President Xi Jinping's crackdown on corruption and official extravagance. Then there is the evolution of Chinese consumer preferences: Young people increasingly prefer other alcoholic beverages like wine and cocktails.
Overall beer sales dropped for the first time in 2014. The downtrend continued into 2015, with sales in the first nine months falling by 7.3% on the year.
After the acquisition binge, large companies are stuck with local breweries that are too old and inefficient to make profitable beer in today's supercompetitive market. Many production lines at these small breweries are idle. CR Beer, for instance, is using only half of its overall capacity.
Brewers are under heavy pressure to scrap unprofitable breweries and scale down their workforces. When major players announce their full-year earnings in March, the figures could trigger a round of serious cost-slashing.
8 Feb. 2016