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.
Russia. Baltika summarized H1 results
Baltika’s volume market share was 34.8% (source: Nielsen Retail Audit, Urban & Rural Russia), representing a sequential 140bp improvement compared to H2 2015 but a decline of 120bp year-on-year. The market share improvement vis-á-vis H2 2015 was mainly achieved in the Modern Trade channel.
Baltika shipments declined by only 2% in comparison to the same period last year, being positively impacted by destocking among wholesalers and distributors in Russia in 2015.
We saw good performance of Zhigulevskoye brand (+1.6% share growth*), Baltika 9, Carlsberg (+1.1% share growth*) and energy drink Flash Up. Baltika 0 continues to increase the amount of sales volumes, being the undisputable leader of non-alcoholic beer segment. Last year’s newcomers, Neon Beer, Seth & Riley's Garage and a series of regional launches of the company also showed growth in volumes. The "Baltika" brand is the undisputed leader in the market, the five brands of the company are in the top 10 brands in the Russian beer market. In addition, the variety of Baltika brands in every form of packaging (in a bottle, a can and a plastic bottle) hold primacy in sales throughout Russia.
In addition, in H1 2016 Baltika Breweries has increased its market share in the draught beer channel by 5 p.p.* compared to the same period last year and moved from the third place (by results of FY2015) to #1 position.
In the first half of the year, Baltika has continued to focus on the development of key brands and support sports for the purpose of its development and formation of high culture of cheering for sports. Thanks to the brand Baltika 3 - the partner of the KHL Championship - the main trophy of the KHL took a tour of fame, trophy visited 11 cities in Russia and Belarus. With the support of the official sponsor of UEFA EURO 2016 brand Baltika 7 held a large-scale campaign that opened the Russian fans 7 different sides of the main event of the season. In addition, Baltika continues the partnership with the Russian Olympic Committee and was a partner of the "House of fans of the Russian Olympic team," in Rio de Janeiro, Baltika 0 started federal advertising company in support of the Russian team "We can do everything!".
Company brands traditionally actively support major summer events. So, Neon Beer brand became a partner of the SENSATION festival (Moscow) and the festival of electronic music and contemporary art PRESENT PERFECT (St. Petersburg) and Holsten brand for the third time has supported the festival German traditions Das Fest (Moscow).
In the first half company’s export continued to demonstrate positive dynamics - volume growth of 9% compared to the last year. A significant contribution from sales in the Asia-Pacific region, in particular by increasing the volume in the Chinese market. There is an increase in sales in European countries, largely due to the expansion of the range and output in the largest national network - for example in Germany. Baltika continues to purposefully develop sales of non-alcoholic portfolio. Positive dynamics in the Middle East shows the range of malt beverages; the geography of export of kvass Khlebny Krai - established a regular supply of the traditional Russian drink in North America: the United States and Canada. It contributed significantly to almost double the growth of energy drink sales Flash Up in Central Asian countries. Continued opening of new markets - this year we began shipping in Côte d'Ivoire, Pakistan, Burkina Faso and Argentina - one of the largest and most complex markets in Latin America.
Jacek Pastuszka, president of Baltika, executive vice president of Carlsberg Group, Eastern Europe:
- The slowdown in the decrease of the Russian beer market is a good sign; however, talking about a sustainable trend is premature. The market still goes down. We have a very strong position in the Russian market and we are satisfied with our six months performance. We have integrated Carlsberg Group’s strategy SAIL'22 in our current and strategic plans, adding those specific for Baltika activities which will enable us to increase business efficiency and improve the dynamics of sales in the Russian market.
Financial results of the Carlsberg Group’s Eastern Europe region:
Carlsberg Group’s net revenue in Eastern Europe grew organically by 8%, driven by a solid price/mix of 8% and flat total volumes. Reported net revenue declined by 15% due to a significantly negative currency impact, as all currencies in the region devalued substantially.
Operating profit grew organically by 19% and operating margin improved by 100bp to 15.9%. The improvement was driven by Funding the Journey initiatives, delivering positive price/mix and strict cost control, and was also helped by easy comparables.
The Eastern European beer markets continue to be negatively impacted by the challenging macro environment, especially in Ukraine and Russia. Our volumes were flat for the six months as we saw a deterioration in Q2 of -3% compared to +6% in Q1, when the impact of last year’s destocking among wholesalers and distributors in Russia was more pronounced.
Baltika Breweries, a part of the Carlsberg Group, is one of the largest FMCG producers in Russia. Since 1996, the company has been ranked Number One in the Russian beer market. Baltika owns 8 breweries in Russia and enjoys an expanded brand portfolio. The Company forms a significant part of the Carlsberg Group and its Eastern European region including Azerbaijan, Belarus, Kazakhstan, Ukraine and Uzbekistan. Baltika Breweries is a top exporter of Russian beer: Baltika’s reach includes over 75 countries; the company accounts for over 50% of all Russian beer exports. In 2015, Baltika's products became available in Romania, India and New Zealand. Its brands have won over 670 Russian and international professional and consumer awards.
17 Aug. 2016