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’s luxury liquor makers on the rebound as demand returns despite corruption crackdown
Research by China International Capital Corporation (CICC) forecasts that luxury liquor – defined as being priced at over 200 yuan (HK$234) – will see 25 per cent growth in revenue this year. The luxury sector is seen as becoming more accessible to mass consumers over the next 10 years, providing room for “10 times growth in the coming decade”, CICC said, without providing specific sales forecast figures.
Medium-range liquor will see 10 per cent growth this year, but the low end – bottles priced below 80 yuan – will suffer declines in growth, CICC researchers said.
The beer industry, however, is experiencing weak volume growth, with several breweries posting slight declines in the first half of the year, a recent JP Morgan report said.
China Resources Beer, Tsingtao Brewery and Beijing Yanjing Brewery are feeling the pressure from higher expenses, lower sales and consolidation of the beer market. While some breweries may benefit from a more consolidated beer sector, analysts say the overall market has seen “a volume growth slowdown” and “intensifying competition”.
Separately, the scarcity and greater brand visibility of high-end alcohol has buoyed demand for expensive liquor, CICC researchers say. While China had 1,563 producers of luxury liquors in 2015, only around 10 high-end brands had over 500 million yuan in annual operating revenue. This concentration of profits on expensive liquor within a handful of brands has seen them promote products nationwide at lower costs, a trend accelerated by alcohol dealers that actively seek sales agency rights from a few well-known brands.
Luxury brands such as Moutai, distilled baijiu liquor favoured among the country’s elites, have been slowly recovering after Chinese President Xi Jinping’s anti-graft measures caused demand for luxury drinks to tank. Moutai, which was priced at almost 2,000 yuan a bottle four years ago, quickly fell to as low as several hundred yuan a bottle.
This followed several high-profile arrests of corrupt government bureaucrats that curtailed the practise of gifting Moutai among officials, and a 2012 ban on lavish banquets where free-flowing Moutai was often consumed.
Moutai remains China’s most expensive drink, with its wholesale price slowly climbing back, increasing from 820 yuan in March to between 900 and 930 yuan per bottle in late July. The price gains helped Moutai widen its lead over peers and pointed to “its irreplaceable value as a scarce brand,” according to the CICC report.
“The underlying driver is the upgrading in mass consumption,” the report said. “In an age of mass consumption, top brands tend to enjoy higher premiums. Moutai’s price is still reasonable given the strong demand.”
High demand mean that luxury liquors may be temporarily unable to keep up with supply, and analysts predict a production shortfall of 0.4 metric tonnes over the next five years.
Moutai, for example, plans to ship 8,000 tonnes of liquor in the second half of this year. In order to satisfy liquor demand for next year’s Spring Festival in late January, Moutai will likely end up with a total shipment volume of 12,000 tonnes for the latter part of 2016, ending the year with over 70 per cent more in sales volume than 2012, according to CICC.
While analysts remain wary that a macroeconomic slowdown in China’s economy could affect the consumption of high-end drinks, they are bullish on luxury liquors. “High-end liquor brands will likely maintain strong profitability,” CICC said.
4 Aug. 2016