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.
Analysis of beer market in China
China’s transition to a “new normal” reality backfired on the brewing industry unexpectedly. Stagnation and subsequent market decline resulted from dynamic social and economic changes. There has emerged a “two speed” market where the medium class significance is growing, yet the share of main beer consumers, “blue collar” is decreasing. Also the inflow of consumers is shrinking, as demographics stopped being a growth driver. Finally, beer is giving way to other alcohol drinks....
China. CR Beer profit bubbles despite flat market
China Resources Beer bought out SABMiller’s 49 per cent stake in China Resources Snow Breweries — the brewer of the world’s top-selling beer by volume — for $1.6bn earlier this month, ending a 22-year-old joint venture that produced voluminous vats but punier profits, writes Patti Waldmeir in Shanghai.
Last year included big strategic changes for the company. “As of 1 September 2015, the Group had completed the disposal of all of its non-beer businesses – including retail, food and beverage businesses – to its parent company China Resources (Holdings) Company Limited (“CRH”) for a total consideration of HK$30m” the company said in a statement to the Hong Kong stock exchange.
“The strategic move has unleashed the value of its market-leading beer business from the previous conglomerate structure and associated capital constraints, allowing greater flexibility to execute its business plan and to lead further industry consolidation,” the company said.
Consolidated turnover and the consolidated profit attributable to shareholders of the Company’s continuing operations amounted to approximately HK$34bn and HK$831m, representing increases of 1 per cent and nearly 14 per cent, CR Beer said.
But Jeremy Yeo of Mizuho Securities in Hong Kong pointed out that core net profit (ex-losses taken on discontinued operations) was only up 9 per cent year on year to HKD815m. “The company’s implied 2H15 net profit on continuing operations declined 6.5 per cent year on year to HK$303m”, he wrote. The results reflect “harsh competition amidst an overall sluggish demand environment. We see consolidation as the primary driver of shareholder value over the medium term,” he said.
The China beer market shrank over that period, CR Beer said, “due to slower national economic growth and abnormal weather conditions in China” but the company’s beer business “deepened its penetration into various regions, optimized its product mix, enhanced its cost efficiency by leveraging its economies of scale and a better management over selling expenses”, the statement said.
Beer production in China in the first nine months of 2015, the latest period for which figures are available, fell 6 per cent by volume year on year, according to local analysts.
CR Beer’s purchase of the Snow stake was viewed as a key milestone for AB InBev as it has been shedding assets to win regulatory approval across the globe to close the largest beer deal in history.
18 Mar. 2016