The beer market dynamics in Russia is approaching zero, yet major brewers are divided into those who developed considerably in 2017 and those who considerably reduced their volumes. For instance, company Efes has managed to substantially extend their sales due to restrained pricing policy and activity in the modern trade. Heineken has also demonstrated an excellent performance promoted by significant increase of advertisement budgets launching a non-alcohol sort of the title brand and unusual activity in the economy market segment. Carlsberg and AB InBev have been focusing on margins and lost a market share of their inexpensive brands. Serious dependence on PET package and mass enthusiasm about Zhigulevskoe have negatively impacted the most of big regional brewers, that have been for the first time pressed by the leaders in the key sales channels, especially in Volga and Central regions. In the small business there has been a noticeable slowdown in appearing of new restaurant breweries, yet the number of craft breweries has been growing rapidly. In 2018, the beer market is likely to grow a little, while the share of AB InBev Efes may decrease due to the integration. ...
“Catalogue of Russian Beer Producers 2018” includes 1070 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft microbreweries.The catalogue includes 32 large breweries, 75 regional breweries, 693 industrial mini- and microbreweries as well as 270 restaurant breweries. ...
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.
India. Foreign bank to snap Mallya ties
Overseas banks have now started to tighten the screws on the beer baron who scurried out of India last month after a passel of local banks declared him a wilful defaulter and initiated court proceedings to recover over Rs 9,000 crore in unpaid loans.
The Royal Bank of Scotland (RBS) has now declared that it will stop offering banking services to Kingfisher Beer Europe Ltd (KBEL), the London-registered company that markets the eponymous beer that has a 36 per cent market share in India.
Kingfisher Beer Europe Ltd (KBEL) - a key operating company within the beleaguered baron's group - has its offices at Springfield House, Maidstone, Kent.
In a filing with the US securities regulator, Securities and Exchange Commission, earlier this week, Mendocino Brewing Co Inc said RBS had informed KBEL of its intention to terminate "all banking services" from May 31.
Mendocino is a Mallya-owned maker of specialty beers and malt beverages based in California and listed as "intermediate parent" of KBEL in the latter's filings with Companies House, UK's registrar of companies.
RBS wanted to terminate the relationship with KBEL from February 26 but has since extended the date twice.
KBEL's financial statement for the year ended December 31, 2014 - filed with Companies House in September last year - lists RBS as its only banker.
The RBS move could not have come at a worse time for Mallya. Last week, a two-member bench of the Supreme Court asked the tycoon's counsel to submit an affidavit by April 21 indicating when he intended to return to India and start a meaningful dialogue with a consortium of 17 local banks to clear their dues.
Last Saturday, Mallya also failed to appear before the Enforcement Directorate (ED) to respond to questions over an alleged money laundering investigation relating to a Rs 900-crore loan extended by IDBI - the third time he has ignored the ED's summons. The earlier summons had sought his appearance on March 18 and April 2.
RBS credit facility
KBEL had signed an agreement in April 2005 for a £1.75 million (roughly $2.8 million) revolving line of credit with an "an advance rate based on 80 per cent of KBEL's qualified accounts receivable".
The initial term of the credit line was for a one-year period. Either party could terminate the credit line with a six months' notice.
"The credit line carries an interest rate of 1.38 per cent above the RBS base rate and a service charge of 0.10 per cent of each invoice discounted," Mendocino's filing with the SEC said.
But on November 24, 2015, KBEL received a notice from RBS in which the bank said it intended to terminate the credit line on February 26 this year.
The amount outstanding on the credit line as of September 30, 2015 was £538,400 (approximately $813,900).
The Mendocino filing said KEBL was in talks with third parties to "find alternative financing to replace the credit line and other banking services presently provided by RBS".
KBEL's immediate parent is United Breweries International (UK) Ltd which, in turn, is owned by Mendocino. Mallya retains control over these overseas units and, through them, parts of his overseas empire which is tightly controlled through a network of shell companies registered in well-known tax havens.
Documents reveal that KBEL has been granted an exclusive licence by United Breweries Ltd of India that confers "rights to brew, market, develop and sell Kingfisher Lager in the United Kingdom".
This pact and secondary agreements with United Breweries International (UK) Ltd are due to expire in October 2018.
The company has in turn granted a sub-licence for brewing Kingfisher beer in London. "In October 2013, the holder of the brewing sub-licence changed from Shepherd Neame Ltd to Heineken UK."
In October 2013, Heineken UK provided KBEL with a secured term loan facility of £1 million to be repaid in 12 equal quarterly instalments starting January 2014 along with interest at the rate of 5 per cent above the Bank of England base rate. The principal outstanding at the end of September 2015 was £416,700.
For the year ended December 31, 2014, KBEL reported a turnover of £13.46 million, which is "principally derived from the sale of Kingfisher beer", the company said in its financial statement.
UK sales of beer accounted for £11.92 million, over 88 per cent of KBEL's turnover. The company earned an operating profit of £645,681. It had a net debt of £1.23 million.
The financials of Mendocino Brewing, United Breweries International (UK) Ltd and KBEL are consolidated in United Breweries Holdings Ltd - the BSE-listed company that controls Mallya's diverse interests. UB Holdings has a 68.1 per cent ownership interest in all three companies.
11 Apr. 2016