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.
Thailand. Can Thai Beverage Public Company Limited Defend its Fastest Growing Segment?
Without a doubt, the company’s Beer segment was the standout performer for the year, with revenue and sales volume increasing by 22.5% and 17.5%, respectively. The segment had also gained market share at the expense of the Leo brand of beer, a leading competitor to Thai Beverage’s own Chang beer brand.
As a brief recap, Thai Beverage has four major business segments in total, namely, Spirits, Beer, Non-alcoholic Beverages, and Food. It operates mainly out of Thailand.
In a recent earnings briefing, analysts were curious to find out how Thai Beverage’s competitors – like Leo for instance – were reacting in terms of pricing. Prapakon Thongtheppairot, Senior Vice President Beer Product Group responded:
“I think it is hard to say what we would expect our competitor would react to when the competitor lose market share at this level. I have to say that we do respect their action, but we would welcome their price reductions greatly.”
Ueychai Tantha-Obhas, Executive Vice President Spirit Product Group, added his take as well on the potential price competition between Leo and Chang:
“Actually, there is some price reduction in the market already. Because of their kinda heavy trade deal. But I think Chang now is able to maintain, and sort of defend itself on the pricing pretty. Actually on our small bottles, we are at price parity or even higher than them. And we still see the volumes to grow.
We are not arrogant or anything but we are quite certain that the green bottle has lifted up a lot of our image and then the price gap is really, really narrow. We strongly believe that we can be at price parity very soon, without losing volume.”
Tantha-Ohbas also added his view about price differences:
“Actually, I don’t think so. If you look at 7-11, our big bottle is only THB 1 different. Our small bottle is now higher than Leo. The can is about the same. We are catching up very quickly. We haven’t seen any volume dented yet so far.”
The Beer segment made up over a quarter of Thai Beverage’s top-line in 2015. However, it only contributed 6.2% of the company’s net profit. This could be an interesting area of the company to observe for investors in the current year and beyond.
14 Mar. 2016