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.
Carlsberg aims to strengthen position in India – CEO
It was better than the 1.91 billion crowns loss forecast in a Reuters poll, and at 1210 GMT the share traded 3.9 percent higher for the day.
Below are comments from Chief Executive Cees 't Hart to Reuters:
ON 2016 SWING FACTORS
"We see the growth of the Asian division as an opportunity. We have a stellar growth in especially India. For us it is important to see if this strong growth in India is sustainable, by which we are building up a very attractive business pretty quickly."
ON DEVELOPMENT OF THE INDIAN MARKET
"India is like many countries in one country. We have been able to get into number one and number two positions in some states. Those are relatively isolated states. Almost like countries in Europe, or even more so as you have to pay import duty in some of these states.
"Once you have a position as number one or number two you are pretty well protected in such an environment.
"We need to strengthen that and grow to more states in order to increase our footprint in India. It is not an immediate profit bringer, but it can potentially be a growth bringer over the coming five to ten years."
ON 2016 GUIDANCE
"I generally feel that the guidance here at the beginning of the year is a realistic one.
"We assume the Chinese beer market will show an improving trend compared with the declining trend of the last two years. That needs to come through, of course. We are a bit more optimistic there.
"The Eastern European markets are expected to remain under pressure. The last couple of months the macro economics in Russia have not improved at all.
"So I will sincerely say this guidance is a realistic one".
ON MAKING ACQUISITIONS
"Our focus is on organic improvement in the company. It is too easy to say that we buy our way out of the issues we have. We need to improve in Russia. We need to improve our margins in Western Europe. We need to continue our growth, with costs as well, especially some capex in India.
"We have enough on our plate in order to do better.
"M&A is not on our top list".
($1 = 6.6086 Danish crowns)
18 Mar. 2016