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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.

Japanese drinks groups seek global depth

Asahi Group Holdings' move into Europe shows how eager Japanese drinks groups are to expand beyond a shrinking domestic market.

Asahi, whose acquisitions had focused on the Asia-Pacific region, has bid for four SABMiller companies, including venerable brewers Birra Peroni and Royal Grolsch. The 2.55 billion euro ($2.89 billion) deal would mark the first major Japanese push into European beer.

Sitting atop the domestic market, Asahi has a solid earnings base from which to venture outward. But it, too, is feeling the weight of the demographic and other factors depressing Japanese beer consumption. In volume terms, sales of its flagship Super Dry brew are down by roughly half from their peak. The European acquisition will add some much-needed geographic diversity to its business, with foreign sales expected to rise to nearly a fifth of the total.

Rival Kirin Holdings has led the way in the race to globalize. "We will solidify our position in Asia and Oceania," President Yoshinori Isozaki says.

Last summer, Kirin made a subsidiary of Myanmar Brewery, the biggest in the Southeast Asian country, bringing it alongside group member Lion, Australia's top beer company. Kirin also owns a nearly 50% stake in Philippine market leader San Miguel.

In Myanmar, Kirin aims to double sales to 50 billion yen ($445 million) within five years. It will transplant production technology to the local unit to boost efficiency and quality. And it may introduce its mainstay Ichiban Shibori beer to the local market, according to Isozaki.

Suntory Holdings has become the world's third-biggest distiller through its $16 billion acquisition of Beam in 2014. It is combining sales channels with the U.S. spirits group, seeking growth in exports to North America and other markets. Collaborations that exercise Suntory's strength in product development, such as canned highballs made with Jim Beam bourbon, are also in the works. Suntory aims to reach 4 trillion yen in global sales, a gain of 50% over the current level, by 2020.

Sapporo Holdings became the first Japanese beer company to enter the Vietnamese market in 2010. It revamped its main local brew last fall and expanded sales nationwide. President Tsutomu Kamijo reports solid progress and says the brewer will keep trying to stir up fresh local demand.

Global consolidation is proceeding apace in the beer industry, as shown by top-ranked Anheuser-Busch InBev's more than $100 billion bid to acquire No. 2 SABMiller, making overseas expansion all the more important for their smaller Japanese competitors.

12 Feb. 2016

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