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4-2017

Global hop market

A 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 Russia

Germany 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.

China. In 2015, Zhujiang Brewery slightly reduced its operating income and production volumes

In 2015, the company produced 1.1598 million tons of beer which is 0.86% less than last year. The operating income decreased by 0.19% to 3516.97 million yuan.

Despite the declining trend in the beer market and the second year of hardening competition in the industry, Zhujiang Brewery seeks to become a leader among beer producers in the premium segment.

 

2013-2015 Financial results, yuan

 

 

 

2015

 

2014

 

This year over last year

 

2013

 

Operating income

 

3,516,971,452.24

 

3,523,776,817.24

 

-0.19%

 

3,349,142,763.97

 

Net profit attributable to shareholders of listed companies

83,155,318.9560,394,478.0137.69%41,237,683.91
 

Net profit attributable to shareholders of listed companies of non-recurring gains and losses

 

47,196,078.89

 

46,619,925.00

 

1.24%

 

17,234,081.32

 

Net cash flow from operating activities

722,091,768.561,167,236,126.28-38.14%1,219,670,016.30
 

Basic earnings per share (yuan/share)

0.120.0933.33%0.06
 

Diluted earnings per share (yuan/share)

0.120.0933.33%0.06
 

Weighted average return on net assets

 

1.41%

 

1.27%

 

0.14%

 

1.27%

 

 

2015 The end2014 The end 

The decrease over the previous year end

2013 The end
 

Total Assets

6,484,938,986.166,284,537,028.653.19%5,744,543,505.25
 

Net assets attributable to shareholders of listed companies

3,391,487,232.673,323,582,244.422.04%3,273,390,192.93

 

Zhujiang Brewery increased its operating income from beer sales by 0.46%, at the same time, sales profitability increased by 0.83 percentage point to 42.02%.

The decline in incomes from leasing catering services and the costs increase in this sector also had a negative impact on the final result of the activity. Note that the policy of limiting the number of banquets is called one of the reasons of the Chinese beer market drop.

 

The main business (more than 10%) income 2015

 

 

Operating incomeOperating costGross marginOperating income over the period last yearOperating costs over the period last yearGross margin period last year
 

By product

 

Beer sales

 

3,407,066,506.46

 

2,009,456,677.13

 

41.02%

 

0.46%

 

-0.94%

 

0.83%

 

Yeast feed sales

 

24,769,712.82

 

 

 

100.00%

 

-16.08%

 

 

 

 

 

Packaging Materials

 

3,114,322.44

 

2,708,459.02

 

13.03%

 

-0.32%

 

-6.33%

 

5.58%

 

Leasing catering services

 

27,936,367.36

 

26,690,963.11

 

4.46%

 

-25.21%

 

16.62%

 

-34.27%

 

Other

 

54,084,543.16

 

34,552,438.76

 

36.11%

 

-13.07%

 

-7.20%

 

-4.04%

 

REGION

 

South China

 

3,335,448,905.13

 

1,930,380,436.47

 

42.13%

 

2.26%

 

1.14%

 

0.64%

 

Other areas

 

181,522,547.11

 

143,028,101.55

 

21.21%

 

-30.70%

 

-21.83%

 

-8.94%

 

Despite the fact that the main income of the company provides the market of southern China, the decline in sales in other regions led to a reduction in revenues.

The company declares the following the "Dual focus" strategy, focusing on market strengths and key markets. Zhujiang Brewery seeks to expand its geographical presence and increase its share on the previously developed markets, especially in rapidly developing southern China. In addition, the company actively promotes the Pearl River brand and its non-alcoholic version.

We would like to remind that 25.62% of the shares of Zhujiang Brewery are owned by AB InBev.

31 Mar. 2016

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