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.
China Resources Beer gains more than 49% of China Snow
The deal values the Snow Breweries venture, maker of the world’s best-selling beer, at 11 times 2014 net income before taxes, or about half the median 21 times earnings before interest and taxes valuation for brewery deals announced over the past 12 months, according to data compiled by Bloomberg. The transaction was approved by the board and is subject to regulatory approval, China Resources said in a statement Wednesday.
Sale of the stake may help AB InBev secure Chinese antitrust approval for its acquisition of SABMiller. For China Resources, it will mean tackling the local market without an overseas partner, as beer consumption in the country is expected to grow with younger consumers increasingly migrating to high-end, foreign-brand brews.
“It will be tougher for China Resources Beer now as they have to develop their premium segment organically,” Mizuho Securities Asia Ltd. analyst Jeremy Yeo said via telephone. “Their priority now will be to accelerate consolidation within beer space in China; any other large asset that comes up, they will be ready to get it.”
Yeo had expected China Resources to pay $3.3 billion for the 49 percent stake it didn’t own, while analysts at Nomura Holdings Inc. and Sanford C. Bernstein previously estimated the stake’s value at about $5 billion.
China Resources Beer shares rose as much as 35 percent to HK$17.20, the biggest intraday jump in almost a year. The Hong Kong-listed brewer last year hived off businesses including supermarkets and food to parent China Resources Holdings Co. in order to focus on beer. The state-owned conglomerate’s units range from drugmakers to real estate, and it has sought deals globally including a failed bid for Fairchild Semiconductor International Inc.
The Snow deal is conditional on the successful acquisition of SABMiller by AB InBev and is expected to close in conjunction with that merger, the Belgian beermaker said in a statement Wednesday. AB InBev said Feb. 25 it was making progress with Chinese regulators on gaining approval for it to buy London-based SABMiller, in the beer industry’s biggest-ever deal.
Beer sales in China, the world’s largest beer market by volume, are expected to rise 41 percent in the five years through 2019 to reach 683 billion yuan ($104 billion), according to a June report from research firm Euromonitor.
Snow is the world’s best-selling beer by volume, Euromonitor’s data shows. The partnership between SABMiller and China Resources, which began with two breweries in 1994, operates more than 90 operations across China, according to SABMiller’s website.
Nomura and UBS Group AG advised China Resources on the deal, along with Rothschild & Co., Citigroup Inc. and HSBC Holdings Plc. Advisers to AB Inbev on the Snow sale are Lazard and Merrill Lynch International, with Sullivan & Cromwell, Freshfields Bruckhaus Deringer LLP and Fangda acting as legal counsel.
2 Mar. 2016