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.
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.
United Breweries, Sanofi India and Bayer CropScience boards to go with Vijay Mallya as chairman
Several independent board members of these companies, speaking on condition of anonymity, told ET that until they receive any government or regulator's notice questioning Mallya's position they have no plans to ask him to step down as there are no complaints of corporate governance issues or irregularities against the board director.
"The functioning of the companies are smooth and there are no valid issues to ask him to step down," said an independent board member of United Breweries, now majority owned by Dutch beer maker Heineken.
Mallya, whose now defunct Kingfisher AirlinesBSE 3.03 % owes more than Rs 7,000 crore to bankers, did not respond to an emailed questionnaire from ET as of press time Wednesday. Some banks have declared Mallya 'wilful defaulter' and initiated loan recovery proceeding against him. They also approached the Supreme Court to prevent the businessman from travelling abroad because they feared he would settle abroad.
Some directors said the term wilful defaulter has come into usage recently and it is not clear whether it allows banks to stop lending to companies that have a wilful defaulter on its board.
GA Tadas, executive director at IDBI BankBSE 1.60 %, however, said companies have to take action once it is public that one of their board members is a wilful defaulter. "In case a company is non-compliant and still retains a wilful defaulter on its board, then it is for (market regulator) Sebi and RoC (Registrar of Companies) to act against such companies for noncompliance," he said.
Tadas, however, said it is not a problem to lend to a company which has a wilful defaulter on board. Mallya is currently chairman of UB, drug maker Sanofi, and Bayer CropScience, agricultural subsidiary of German chemical and pharmaceuticals giant Bayer AG.
A Bayer spokesperson denied comment on this topic, while an independent director at the firm said any decision on Mallya has to be taken by the German parent. A Sanofi India spokesperson said the board of directors will study the implications of the Sebi notification when it is published, and take action as deemed necessary. Shriram Subramanian, institutional shareholder activist and founder & MD of investor advisory firm Ingovern, said wilful defaulter is not a legally accepted term to debar Mallya from the boards of these companies.
"If Sebi notifies a policy that wilful defaulters cannot be board members then the board will have to ask him to gracefully step down," he said. "Now if the board perceives a reputational risk, it is another issue altogether," Subramanian said.
Several independent board members ET spoke to on these boards, especially United Breweries, said there are no corporate governance issues or irregularities committed by Mallya to ask him to step down. "Reputational risks arises if a regulator or government body challenges Mallya's role on our boards or if Mallya has done some financial impropriety and we do not take note of it, which is not the case now," said an independent board member.
An official at United Breweries, speaking on condition of anonymity, said it will examine the issue if a leading bank such as the State Bank of India "sends a letter saying that it will not lend to companies that have a director as a wilful defaulter".
17 Mar. 2016