The beer market dynamics in Russia is approaching zero, yet major brewers are divided into those who developed considerably in 2017 and those who considerably reduced their volumes. For instance, company Efes has managed to substantially extend their sales due to restrained pricing policy and activity in the modern trade. Heineken has also demonstrated an excellent performance promoted by significant increase of advertisement budgets launching a non-alcohol sort of the title brand and unusual activity in the economy market segment. Carlsberg and AB InBev have been focusing on margins and lost a market share of their inexpensive brands. Serious dependence on PET package and mass enthusiasm about Zhigulevskoe have negatively impacted the most of big regional brewers, that have been for the first time pressed by the leaders in the key sales channels, especially in Volga and Central regions. In the small business there has been a noticeable slowdown in appearing of new restaurant breweries, yet the number of craft breweries has been growing rapidly. In 2018, the beer market is likely to grow a little, while the share of AB InBev Efes may decrease due to the integration. ...
“Catalogue of Russian Beer Producers 2018” includes 1070 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft microbreweries.The catalogue includes 32 large breweries, 75 regional breweries, 693 industrial mini- and microbreweries as well as 270 restaurant breweries. ...
Global hop marketA 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 RussiaGermany 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.
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