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.
Vietnam’s brewers say new luxury tax rules hurting beer market
According to local media reports, the companies said at a meeting on Wednesday that they are very concerned about their business.
On January 1, the special consumption tax rate on beer was increased from 50 percent to 55 percent.
On top of that, new regulations also changed how the tax is calculated. Brewers are now required to work out the average retail price of a product, then add 7 percent to that number to come up with the final taxable price.
Speaking at the meeting, Le Hong Xanh, deputy CEO of the country's biggest beer maker Sabeco, said the government should suspend the new rules for at least one year, or brewers will have to increase their prices to make up for the tax hike.
Nguyen Hong Linh, CEO of Habeco, another major brewer, agreed. He said businesses need more time to prepare for the changes and reduce business risks.
He pointed out that the new rules were announced at the end of October last year and came into effect on January 1, not giving the industry enough time.
Nguyen Van Viet, chairman of the Vietnam Beer Alcohol Beverage Association, was quoted as saying that once local products become expensive, cheap products such as smuggled and counterfeit items may flood the market.
The brewers' request was supported by the Vietnam Business Forum, a group of associations of foreign businesses such as the US and European commerce chambers, Tuoi Tre reported.
The group has sent a proposal to Vietnam's national legislature, asking it to revoke or suspend the new rules.
Many beer businesses said the "average retail price" rule is particularly problematic.
They said it is impossible to know exactly how much retailers, such as restaurants and bars, charge their customers to come up with an average price for luxury tax calculation.
But tax agencies may have their reason to tighten the rule.
Previously beer producers calculated the tax simply based on the wholesale prices that they themselves set when selling to their distributors. That potentially created a loophole that allowed some companies, with their own network of distributors, to rig the system by setting unfairly low prices.
In July last year, for instance, state auditors ordered Sabeco to pay VND408 billion (US$18.68 million) in luxury tax dues that it allegedly owed from 2013.
The brewer was accused of selling its products to Sabeco Trading Co. Ltd, which it fully owns, at low prices thus paying less taxes. This company then sold the products, once again at low prices, to 10 other "regional" distributors, in which Sabeco has at least a 90 percent stake.
The scheme allowed Sabeco to pay only a small amount of luxury tax, before increasing final prices when dealing with retailers, local media then reported, citing state auditors.
Vietnam’s beer production grew 10 percent to 3.4 billion liters last year and will hit 4-4.25 billion in 2020, according to figures from the beer association.
21 Mar. 2016