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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 Resources Beer to raise HK$9.5b in rights issue, as it preps to buy SABMiller’s 49pc stake in Snow Breweries

China Resources Beer, the country’s biggest beer maker, said Wednesday it was planning to raise HK$9.5 billion in what is likely to be one of the largest rights issues in Hong Kong since last year, as it prepares to buy a 49 per cent stake in China Resources Snow Breweries, currently owned by SABMiller.

The brewery behemoth under Chinese state-owned conglomerate China Resources said part of the money raised would be used to fund the purchase.
A rights issue - an offering of shares to existing shareholders - was carried out at a 30.8 per cent discount to Tuesday’s closing price at HK$16.94, comprising as many as 811 million rights shares on the basis of one for every three existing shares.
As of 11:30am, CR Beer’s shares were at HK$16.30, down 3.78 per cent from Tuesday’s close.
The deal, which was believed be one of the biggest rights issues in Hong Kong’s capital market during the last year, came months after the beer maker announced proposals to boost its stake in the country’s biggest brewing company.
“We will continue to explore business expansion opportunities through both organic growth and acquisitions,” Chen Lang, chairman of CR Beer said. “To capture these growth opportunities, we consider the rights issue to be in the best interests of the company and its shareholders as a whole.”
CR Beer’s co-owned Chinese brand Snow is the world’s largest-selling beer, accounting for 23.2 per cent of the beer market in China in 2014, according to data from Euromonitor, an international market research company.
But it is also faced with intensifying competition from other major players, including Tsingtao Brewery, Beijing Yanjing Brewery and Carlsberg, as well as a shifting preferences among Chinese consumers who are increasingly turning to higher-end beer.
CR Beer’s US$1.6 billion acquisition of SABMiller’s stake in CR Snow is anticipated to go through by the end of this year. Nomura analysts said in November that SABMiller’s 49 per cent stake is Snow Breweries could fetch up to US$3.6 billion.
Over the last year, big transactions of this kind in Hong Kong include a rights issue by Chinese conglomerate Fosun International, which raised over HK$11.6 billion last September.

6 Jul. 2016



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