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.
China Resources Beer goes upmarket to counter slowing sales
Full-year underlying profits for the group's beer assets increased 14% to HK$831 million ($101 million), partly helped by a 3.2% increase in its average sales price. Revenue slowed to 1% growth, reaching HK$34.8 billion in the 12 months ended December.
The higher profit in its beer business came in spite of a 1.3% fall in sales volume on the year. Meanwhile, the group saw a 15% rise in sales volume from its mid-end and premium sector, which now accounts for more than 45% of the total.
Earlier in March, CR Beer agreed to pay a less-than-expected $1.6 billion for SABMiller's remaining 49% stake in the brewer behind the world's best-selling Snow beer -- China Resources Snow Breweries, which was a joint venture between the two brewers.
Vincent Tse, investor relations director at CR Beer, said the deal was based upon a "friendly price" after "arm's length negotiation," adding that the brewer would not rule out future cooperation with SABMiller and plans to seek overseas partnerships.
While the deal is awaiting regulatory approval and is scheduled to close at the end of this year, Guotai Junan Securities maintained a "neutral" rating for CR Beer on Mar. 2. "The deal is not likely to ease the already intense competition and room for a hike in average selling price is limited in the Chinese beer industry," said Andrew Song, an analyst at the Chinese brokerage.
"Growth has been difficult for the beer industry, but the premium sector is still growing," Jason Hou, general manager at China Resources Snow Breweries told reporters on Friday. The brewer has a "low single-digit" growth target for its sales and average selling price in the coming year, he added.
CR Beer changed its name from China Resources Enterprises after it sold non-beer assets including the loss-making Tesco stores to its unlisted parent China Resources Holdings in September for $3.6 billion. Its underlying losses of discontinued operations, including retail, food and beverages, surged more than threefold to HK$5.65 billion from a year earlier.
The beer market in China is highly competitive. CR Beer had a 23% market share in 2014, with Tsingtao Brewery second at 18%, according to market research group Euromonitor International. The rest is divided between major brewers such as Beijing Yanjing Brewery, Anheuser Busch InBev, Carlsberg and a handful of smaller players.
But others say the beer sector in China still has room for margin expansion and "premiumization" -- a trend that has seen more wealthy consumers trading up to more expensive brands of alcohol.
21 Mar. 2016