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.
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