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.
Beer market of Vietnam: “Young tiger”Vietnam is one of the few big beer markets that continue to grow steadily. The beer popularity results from its low price, street consumption culture, and social motives. The outlooks of beer market as well as the Vietnamese economy inspire optimism, though the country is heavily dependent on export of goods. The state regulation can be called liberal, but the key risk for brewers is harbored in intensive rising of excise. Within TOP-4 there are two leaders, Sabeco and Heineken that grow at the fastest rates. The first company effectively employs its capacities, the second one focuses on marketing technologies. Almost 80% of the market belongs to century-old brands, yet the middle class and the youth are shifting their interest toward international premium that is growing taking share from the mainstream.
Thirsty for growth, foreign brewers pile into Myanmar
Japan's Kirin Holdings and Dutch company Heineken are among those flocking to the market, which was opened after the democratization process began in 2011.
Kirin, which acquired local beer giant Myanmar Brewery last year, is aggressively making inroads with such premium offerings as the flagship Ichiban brand. Heineken, meanwhile, is planning an investment to boost local production capacity this year.
Affluent customers pour into Shan Yoe Yar, an upscale Yangon restaurant, nightly, escaping the humid, hot monsoon weather. The eatery started carrying Kirin's Ichiban draft beer in June. A 31-year-old car dealership manager says he enjoys the beer with friends, noting the beverage's smoothness. Kirin markets Ichiban as a premium 100% malt offering. Without promotional discounts, the beer is priced at 3,000 kyat ($2.53) per mug -- double that of popular local offering Myanmar Beer, sold by Myanmar Brewery. But well-off people who like to try new things are interested, according to the restaurant's manager.
In Myanmar, eateries are a major channel of beer sales, accounting for more than 80% of overall beer consumption in the country. The situation differs greatly from Kirin's home market of Japan, where "drinking in" at home makes up about 70% of beer consumption.
Kirin Senior Executive Officer Takeshi Minakata, who oversees Myanmar Brewery as managing director, says the Myanmar unit will promote Kirin offerings as premium brands at restaurants. By working with wholesalers, the goal is to increase the number of eateries serving Ichiban from around 100 or so now to 150 by the end of the year.
Outstanding growth potential
In Myanmar, per-capita beer consumption is a mere one-tenth that in Thailand or Vietnam -- at three to four liters yearly. The economic stagnation under the military regime and the stigma of women and youth drinking alcohol -- based on Buddhist customs -- kept a lid on demand for years.
But since the country began democratizing in 2011, demand has surged in urban areas. The market is expected to more than double from 2013 levels to around $700 million in 2018, according to research company Euromonitor.
In May of last year, Danish company Carlsberg launched production in Myanmar, and Heineken followed suit the following month. The Dutch company rolled out Myanmar exclusive brand Regal Seven, aiming to be the leader in premium brands. It plans to spend about $10 million this year to boost its Myanmar output capacity by about 40% to 45,000 kiloliters annually.
Kirin introduced its Black Shield Stout last fall after acquiring Myanmar Brewery. It also has rolled out the 100% malt craft beer Myanmar Premium.
It usually takes about a year to launch a new product. But Kirin halved the process by allocating managers with production expertise -- including Minakata -- to the project. "We now have a complete portfolio ready to compete in the market," Minakata says.
With a market share of 70-80%, Myanmar Brewery has an overwhelming edge over Heineken and Carlsberg, who have shares of around 10%.
But in a rapidly growing market, the competitive landscape could change suddenly.
For Kirin, the battle is a nerve-racking one, especially after a slump in Brazil. The company shelled out about 300 billion yen ($2.97 billion at current rates) for the acquisition of Schincariol five years ago, only to see its market share tumble. Kirin had to write down the operations last year and is urgently trying to turn the business around.
"We can't fail in Myanmar," says a Kirin official in charge of group strategy.
With the Japanese beer market contracting since peaking in 1994, overseas expansion is a must. But Japanese beer brands generally lack global recognition -- posing a challenge for homegrown breweries. Kirin took a 48% stake in Philippine brewer San Miguel in 2009, hoping to use its brands to propel Asian expansion.
3 Aug. 2016