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.
Vietnam. Delayed state divestment, listing restrict growth of Sabeco, Habeco
At Sabeco, the Ministry of Industry and Trade (MoIT), the state’s representative in the board of directors, approved Vu Quang Hai, son of former minister Vu Huy Hoang, as general director in 2015. Hai was 25 when he assumed the post, giving up his two-year position as the head of a loss-making PetroVietnam subsidiary.
Meanwhile, the State Audit of Vietnam’s 2015 audit of Habeco showed that the company’s unorthodox accounting practice made the 2014 net profit of VND927.13 billion ($42 million) unreliable.
Habeco has subsidiaries in the construction and real estate sectors that run projects behind schedule, which means its investment practices are inefficient. A subsidiary, Habeco Haiphong, is not using the whole land area it is assigned to manage, which is a waste of government property.
The Vietnam Association of Financial Investors (VAFI), which asked the MoIT to explain the assignment of Vu Quang Hai to the post of general director in June, said that such use of personnel is tantamount to weak governance and weak management of state capital. VAFI also claimed that Sabeco and Habeco grew slowly over the past eight years, even though the field of beer, alcohol, and beverage in Vietnam has a lot of potential.
According to Nguyen Dinh Cung, head of Central Institute for Economic Management (CIEM), when leadership positions are assigned to people with no ability, companies will operate inefficiently.
Economist Le Dang Doanh and former head of the Development Strategy Institute Luu Bich Ho both agreed that only when the two companies become public and listed will they become more efficient.
Dao Van Hung, director of the Academy of Policy and Development, said that the private sector would do a much better job managing the two companies and that the government could reinvest its earnings from divesting from the two beer companies into infrastructure.
The state currently holds 90 per cent in Sabeco and 82 per cent in Habeco.
In the middle of May, leaders of Sabeco said they had proposed the government sell 53 per cent of its stakes currently owned by the state. As of now, there is no further information on this scheme.
12 Aug. 2016