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.
Russia. Beer roams the regions
In 2015, four international brewing companies such as Carlsberg, Heineken, Anheuser-Busch InBev and Efes lost their share on the Russian beer market. As a result, the production of small local breweries, which in 2010 accounted for about 15%, for the first time occupied more than one-quarter of the market. Economics plays against transnational giants: due to the crisis, consumers increasingly prefer inexpensive local varieties. Beer consumption in Russia, at year-end was the lowest over the past 12 years.
In 2015, the Russian beer market decreased by 10%, the Danish concern Carlsberg stated in its report. Its volume amounted to 698 million decalitres, Baltika, the Russian of Carlsberg, explained, noting that beer consumption last year was the lowest over the past 12 years – 50 litres per capita (the peak of consumption was in 2007-2008, with 77 litres). According to the Federal State Statistics Service (Rosstat), in 2015 beer production in Russia has decreased by 5.1% to 782 million decalitres.
The shipments of Carlsberg in Russia have decreased by 17% over the past year, its closest competitor Heineken (the company also reported yesterday) by 7-9%. “The negative impact on the overall situation on the beer market had difficult trading conditions and low consumer activity”, Heineken commented the results. The decrease of shipments Carlsberg explained by to the reduction in warehouse stocks at distributors due to “the continued rapid shift of sales from the chain of the traditional trade into the chain modern trade”, as well as the company has raised prices on their products before its competitors.
Carlsberg mentioned that the growing popularity of cheap local brands is another factor which negatively impacted last year's shipment.
For the same reason, obviously, the company, as well as of its three multinational competitors, in 2015 reduced its market share (see table). At the same time, as we can seen from the Nielsen data, the total share of other companies amounted to 26.5 %, having risen by 3 percentage points over the year.
Pavel Erankevich, the director of development national and regional brands of Baltika notes that local manufacturers (over 700 breweries) have been increasing their market share largely due to sales of “take-home” draught and packed beer in the low-price segment. According to him, the prerequisites for this, was the current macroeconomic situation.
Marina Lapenkova, the head of Nielsen group on work with companies in the beer industry explains the success of small breweries primarily by price. “They have, on average, lower price than the federal producers, and it is growing more slowly,” Mrs. Lapenkova explained. Moreover, she notes, local beer is perceived by consumers “as familiar and accessible”.
Nielsen believes that the trend of the growth of local manufacturers will continue in 2016, explaining that in the next couple of years there will be no radical changes in consumer behavior in this product category.
In the meantime, the major beer companies stopped their Russian enterprises, due to the reduction of beer consumption. In total, they had closed 12 breweries since 2008: five breweries had been closed by Anheuser-Busch Inbev, two by Heineken, three by Carlsberg and two by Efes.
|Name||Brands||Market share in 2015 (%)||Market share in 2014 (%)|
|Carlsberg||Baltika, Carlsberg, Holsten||34,7||36,8|
|Heineken||Heineken, Krusovice, Okhota||12,9||13,1|
|Anheuser-Busch InBev||Bud, Klinskoe, Stella Artois||12,8||13,2|
|Efes||Efes Pilsener, Stariy Melnik, Miller||13||13,4|
Source: "Nielsen Russia".
*Shares are given by volume.
11 Feb. 2016