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.
Sri Lanka tax policy that promotes hard alcohol use is ‘shocking’: beer maker
The firm said in October tax on mild beer (lower alcohol content) was raised by 27 percent and strong beer by 32 percent. In November taxes on strong beer was raised by another 29 percent.
Though a reduction in tax on mild beer was announced in November it was quickly reversed again taking the total tax increase up to 70 percent.
While excise tax on strong beer was raised 70 percent, tax on arrack, Sri Lanka's most popular hard alcohol was up only 24 percent.
Tax policy that encourages hard liquor is "unusual and defies rationality" Lion Brewery told shareholders.
"…Sri Lanka is in a unique position; in this country, the tax per millilitre of alcohol is inversely proportionate to the alcohol content in the beverage," Lion Brewery
"In this modern day and age this is a shocking policy anomaly".
Lion Beer said its sales fell after the double tax hikes. It said the gap had been picked up by hard alcohol.
Industry analysts estimate legal hard alcohol sales have increased over 10 percent last year. Hard alcohol sales were also helped by a crackdown on tax unpaid bottles produced by some distilleries connected to members of the ousted Rajapaksa regime.
At one time Sri Lanka had high taxes on beer, which the beer firms said contributed to the abuse of alcohol and moonshine in Sri Lanka. Beer was not popularly consumed by low income earners.
After taxes were rationalised there was an increase in beer consumption. Even construction workers who used to slug a quarter bottle of arrack moved to cans of strong beer.
Anecdotal evidence seem to suggest a reversal of the trend though no data from a scientific study is available.
But Lion Brewery (Ceylon) Plc said revenues fell 4 percent to 8.2 billion rupees in the December 2015 quarter, from a year earlier. After tax profits fell 17 percent to 461 million rupees.
Tax collections on beer which was 2.2 billion rupees in September had fallen to 1.8 billion by December, the firm said.
When taxes are raised on good with elastic demand total tax revenues will fall.
If demand is relatively inelastic and tax hike will reduce the quantity demanded, but not total revenue.
Cigarettes which is strongly addictive and has no close substitutes except 'beedi' a cottage industry product, has a relatively inelastic demand.
Sharply falling sales as well as taxes seem to suggest the ready availability of close substitutes or reduced levels of addiction, or both economic analysts say.
Lion Brewery says in addition to hard alcohol, the toddy industry, a fermented domestic drink, supposedly made from coconut sap, also benefited from higher demand.
Toddy is taxed at 30 rupees a litre compared to strong beer at 315 litre.
"Available information suggests that this so called toddy is made mostly of a
chemical cocktail," the firm said.
"To compound matters, most toddy industry players have a less than perfect reputation for meeting their tax obligations."
18 Feb. 2016