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4-2017

Global hop market

A 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 Russia

Germany 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.

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Japan. Asahi’s Profit Forecast Below Estimates Amid Slowing Economy

Asahi Group Holdings Ltd., the Japanese brewer of Super Dry, forecast 2016 profit that trails analyst estimates as a slowing economy weighs on domestic sales.

Net income will probably be 80 billion yen ($697.4 million) for the year ending December 2016, up 4.7 percent from 2015, the Tokyo-based company said in a statement Tuesday. That compares with the average estimate of 89 billion yen from 10 analysts compiled by Bloomberg. Sales are expected to grow about 0.7 percent, it said.

A higher yen is expected to cut into the company’s profits in 2016 when it repatriates earnings from its overseas operations which make up about 13 percent of Asahi’s total sales, said Managing Director Yoshihide Okuda at a post-earnings press conference in Tokyo Tuesday.

Asahi is among Japanese brewers looking to expand abroad to counter falling domestic consumption amid a stagnant economy, shrinking population and changing consumer tastes. Japan’s central bank unveiled negative interest rates last month as it seeks to spark growth in the country.

The company said last month that it’s considering making an offer for SABMiller Plc’s Peroni and Grolsch brands in Europe. Okuda declined to comment on the deal Tuesday.

"We will do M&As that will enhance our corporate value regardless of whether or not they’re in or out of Japan,” he said at the briefing.

Asahi, which also sells spirits and non-alcoholic beverages and owns about 20 percent stake in China’s Tsingtao Brewery Co., said it is also considering buying U.S. soft drinks company Talking Rain and the Nikkei newspaper reported in December that it could cost about 50 billion yen,.

The company plans to target a dividend payout ratio of 30 percent by 2018 as well as at least 10 percent return on equity in the three years through 2018, according to the Tuesday statement.

Asahi also announced that Akiyoshi Koji, the head of its beer subsidiary, will become group president, replacing Naoki Izumiya who has been appointed chairman. He will retain his post as chief executive officer.

Net income at the Japanese beer maker rose 11 percent to 76.4 billion yen in 2015, the company said.

Asahi’s shares closed 3 percent lower at 3,625 yen in Tokyo trading before the announcement. The benchmark Topix slumped 5.5 percent.

9 Feb. 2016

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