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.
Thai beer drinkers power Singapore’s best stock
Singapore’s equities market, by contrast, is a laggard in Southeast Asia, suffering from lacklustre growth at banks, developers and oil-rig builders.
Malaysia’s Affin Hwang Asset Management Bhd and London’s J O Hambro Capital Management Ltd are buying Thai Beverage shares, convinced the stock has further to climb despite record valuations, as it offers a haven from market turmoil around the world and may benefit from any restructuring plans.
“With slowing global growth, whatever shows potential or sustainable growth attracts a premium,” Kar Tzen Chow, Kuala Lumpur-based fund manager at Affin Hwang Asset, which oversees about $7.6 billion, said by phone. “ThaiBev’s spirits business continues to be stable and the beer business has shown a recovery.”
Thailand is betting on more than $18 billion in stimulus measures to help boost local demand and offset an export slump. The nation’s central bank has forecast economic expansion at 3.1% this year, compared with growth of 1% to 3% for Singapore, whose economy is among the most vulnerable in Asia to swings in global demand. More than 90% of Thai Beverage’s revenue came from Thailand in 2015, data by Bloomberg show.
“The fundamentals for Thai Beverage are very strong, with earnings supported by increasing domestic consumption in Thailand,” Nicholas Teo, a trading strategist at KGI Fraser Securities Pte in Singapore, said by phone. “In contrast, profits at traditional Singapore industries such as banks, shipyards and real estate are deteriorating.”
Billionaire Charoen Sirivadhanabhakdi, who expanded his property business amid government measures to curb alcohol consumption in Buddhist Thailand, was forced to list his Thai beverage unit in Singapore in 2006 after activists and monks held protests to block a local share sale by the company. Thai Beverage, which sells Chang beer, Blend 285 Whiskey and SangSom rum, has grown to become Southeast Asia’s largest beverage stock by market value.
The surge in Thai Beverage will continue as analysts raise their earnings estimates to reflect greater contribution from its beer business, according to Samir Mehta, who helps oversee about $1.2 billion at J O Hambro in Singapore.
Analysts increased their average profit forecasts for 2016 by 7.4% to 26 billion baht ($741 million) after its first-quarter net income jumped 30% from a year earlier. Beer sales volumes soared 61%, lifting the brewery operation’s contributions to group revenue to 33% from 23%. The spirits business remained its cash cow.
There is “limited upside” at current levels following the stock’s recent price run-up, according to Jodie Foo, an analyst at OCBC Investment Research, who cut the stock to hold in a June report.
Thai Beverage is trading at the highest level ever relative to the broader MSCI All Country World Index. The stock is valued at 22 times its 12-month projected earnings, above its average of 16 in the past five years and almost double the multiple for the Straits Times Index, data compiled by Bloomberg show.
Speculation that Mr Charoen will further revamp his beverage businesses in Thailand and Singapore may spur more rallies in the stock, said Religare Capital Markets in a May note. The company’s founder and chairman may consolidate his drinks businesses held through Singapore-based Fraser & Neave Ltd and Oishi Group Plc into Thai Beverage, according to the report. Company officials couldn’t be reached for comment.
The company’s strategic road map toward having 50% revenue contribution from countries outside Thailand as well as from non-alcoholic beverage by 2020 may be sped up via acquisitions and restructurings, according to OCBC’s Foo in her report.
Mr Charoen controls Fraser & Neave through TCC Assets Ltd, which owns 59% of the Singapore company and Thai Beverage, which holds another 29%, according to data compiled by Bloomberg.
“We bought the shares because their cash flows are decent,” J O Hambro’s Mehta said. “The upside could come from the restructuring that the group might undertake. They could simplify the structure and that’s going to be beneficial for the minority shareholders.”
6 Jul. 2016