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.
China. Floods, weather render beer flat
The worst floods in China since 1998 and cooler-than-usual weather are eroding sales at the nation's brewers, deepening a slump caused by the economic slowdown.
China Resources Beer Holdings, the country's largest brewer, said that sales fell 4.6 percent in the three months ended June from a year ago, partly because of "unfavorable weather". Revenue rose 1.8 percent in the first three months this year.
Lower-than-average temperatures and torrential rains probably contributed to a more than 10 percent drop in beer industry sales volume in China in the first six months of 2016, Allen Cheng, an analyst at Morningstar Investment Services said in an interview. Foul weather kept customers away from bars, restaurants and karaoke establishments and deepened a slowdown in sales growth caused by slower economic growth and a shift toward other alcoholic beverages, Cheng said.
Heavy rains in June and July across central and southern China have caused the country's worst flooding in nearly two decades, leaving hundreds dead and farms submerged. Direct economic losses from the floods are estimated to be 147 billion yuan ($22 billion), the government sources said.
The storms will shave as much as 0.2 percentage points from this quarter's economic expansion, according to almost half of economists in a Bloomberg survey.
Regional brewers will probably see a bigger impact than nationwide rivals like China Resources' Snow beer, said Cheng.
China Resources Beer sales fell to 8.36 billion yuan in the three months ending in June, compared with 8.77 billion yuan a year ago. Beer sales volume dropped 3.6 percent to 3.47 million kiloliters in the quarter.
Guangzhou Zhujiang Brewery Co gets 95 percent of its revenue from southern China, according to data compiled by Bloomberg. Chongqing Brewery Co gets 93 percent of revenue from the southwestern region, while Beijing Yanjing Brewery Co and Tsingtao Brewery Co Ltd earn 33 percent and 14 percent of their revenue respectively in the country's south. Most of the companies will report second-quarter earnings at the end of August.
China Resources Beer commanded a 22 percent market share in China last year, followed by Tsingtao with 15 percent and Yanjing with 7.2 percent, according to Euromonitor International.
China Resources shares have gained 2.9 percent this year, while Tsingtao has dropped 22 percent and Zhujiang Brewery has slumped 21 percent.
Zhujiang Brewery declined to comment, while Chongqing Brewery, Yanjing and Tsingtao were not immediately available for comment.
1 Aug. 2016