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.
Guinness Anchor to be Heineken Malaysia
With GAB changing its name to Heineken Malaysia Bhd come April 20 upon shareholders’ approval, GAB managing director Hans Essaadi assures that the brewery will maintain its leading market position as a premium drinks company even with the change in shareholding.
Dutch brewer Heineken NV now controls GAB after it acquired 100% stake in GAPL Pte Ltd last October from Diageo Plc. GAPL held 51% interest in GAB.
Market observers fear the leading local brewery will not be making better profit margins this year amidst the soft consumer sentiment. GAB’s profit margins narrowed in 2015 after the goods and services tax kicked in last April. In FY14, its net profit and revenue dipped for the first time after 12 years.
No doubt with a higher inflation rate expected in the second half of the year, Essaadi says that with the strong brand presence and a wider distribution network after Heineken’s takeover, it will perhaps see better profit growth this year.
“With the long-term agreement with Diego Plc, we will continue to carry Guinness as a key brand.
“Also Heineken NV has more than 250 best-selling brands around the world and we are open to these brand portfolios now,” says Essaadi in an interview recently, adding that with the additional brands coming in and Heineken’s name, it can increase its market share.
As GAB celebrates its 50th anniversary this year, Essaadi believes its experience in brewing with good brands will give the company the competitive edge.
“It’s just a corporate brand change, but it’s business as usual for us and we are consumer-inspired, customer-oriented and brand-led.
“We lead in the premium category and Heineken is the No. 1 international premium brand,” he says.
Also, with world-class marketing strategies and execution, he says GAB has the proven ability in capturing the imagination of consumers and has been prioritising innovation to meet the changing consumer needs.
“Malaysian consumers are becoming more discerning, developing a taste for more cosmopolitan offerings and a preference for exciting experiences,” explains Essaadi, adding that it had launched four new variants in the past nine months, including Tiger White, Smirnoff Ice Black, Tiger Radler Mandarin Orange and Strongbow Red Berries. Apart from these, a new limited edition packaging Heikenen Spectre was also introduced last year.
In terms of cost-saving measures, since GAB is now part of Heineken’s global supply chain, it will enjoy huge cost-savings through strategic procurement that will improve its efficiency, he notes, adding that being part of Heineken’s “Brewing a Better World” initiative is also towards building a sustainable future and growth, says the Dutch.
Despite GAB’s subdued performance last year, Essaadi says the company achieved strong results in reducing consumption of water by 19.2%, thermal energy 9.6% and electricity 6.2%.
Essaadi aims for the brewery to continue operating at optimum levels with minimal wastage of resources.
Notwithstanding, GAB has always believed in people being the core of its business.
“People are the lifeblood of our business and our people-focused culture is built on strategic areas of focus that help shape and develop our most valuable asset.
“Our employees have a passion for quality that is unmatched, enabling the company to grow in the right direction,” he says.
11 Apr. 2016