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. “When I saw that 94% of the total alcohol consumption is beer, I was really shocked”
When you look at the market of Vietnam, you see that it is a very rigidly spread market.
In the North it is predominantly dominated by Habeco, the Hanoi Beer company together also with APB Hanoi.
In the Center of Vietnam you see Heu Brewery that is owned by Carlsberg and you also see a big presence of VBL, in the two provinces Da Nang and Quang Nam.
And the South. That is predominantly the territory of VBL, Vietnam brewery and Sabeco. You also see here that the top four players (Habeco, Sabeco, Heu Brewery, and VBL) have more than 80 per cent of the total market today.
Then, a little more about Vietnam in general and the beer market. When you look at Vietnam at a glance, you see a very young population. We’ll come back to that later. I want to highlight here that GDP per capita in Vietnam is still relatively low, a little more than $2000 per capita, which is very low comparatively to a lot of other countries. Also you see here quite stable improvements and increase of GDP per capita. In the last 3-4 years between 6 and 7 per cent. So there is a steady growth of the GDP here in Vietnam. It is an interesting beer market, 38 mln hl in total and 41 liter per
Then we should look a little more deeply at the demographics, because one of the keys to VBL success now and in the future is very favorable demographics. Young population, as 49% is in the age of less than 30 years, so on average 1 mln people enter the legal drinking age in Vietnam every year. When we look at the rising income it seems simple that every year, people earn more money. And they spend the money. And because of the big beer popularity in Vietnam they want to spend money on beer brands, and they want to spend the money on premium beer brands. The moment they have more money, they upgrade from mainstream brands to affordable premium brands and to premium brands.
Thirdly, the rapid urbanization. Still very low in Vietnam, also when you compare to the total picture in Asia, but more and more people tent to go to the cities. And in the city the beer consumption is 1.6 times moiré than in the rural areas. And the urbanization is especially important in the premium sector. So very favorable demographics for Vietnam and also for our industry.
The already mentioned GDP between 6 and 7%, so recently, yesterday, announced by the prime minister that he will stick to these 6.7% growth for 2016 also. So you can see that the consumers are gaining more confidence, which of course very important for FMCG category and beer.
In addition to this and I think it is also important to mention, we have here quite stable government, just reelected. And it is important to have a stable government where you operate.
Again, another important point, it is a very attractive beer market. When I came here 3.5 years ago and saw that 94% of the total alcohol consumption is beer I was very surprised. And the positive fact that despite the fact that it is high, it is also going up. Figures are approximately 5% per year. And we expect that in the coming years the beer market will continue to grow. When you look at the shares of other alcoholic beverages, of wine and spirits, you’ll see that they are decreasing, So beer is increasing and other alcoholic beverages are decreasing at the moment. So here is a very attractive beer market. Afterwards when we go out of t\here and go to a small low-chairs, you’ll see that everyone is drinking beer, not wine. So, a very interesting beer market.
And if we look at the market structure, you’ll see it a very big on-trade market. More in Asia people go out to wine and dine (in this case, to drink beer), so they are not staying at home. What you do see is that there is an on-going trend that people consume more at home, so you can see the off-trade channel increasing.
Then if we look at the premium sector and that is good news for our sector here in Vietnam, we see that the premium sector is increasing. And you can also see on this slide that the economy segment is relatively low and it is decreasing, so, again, as I mentioned before, people, when they have more money, they spend it on affordable premium and premium brands.
16 May. 2016