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.
Analysis of beer market in China (on Russian)
Beer market of Ukraine: big three losing weightIn 2016, fast increase of excises and resulting price spike stood in the way of the beer market stabilization. Most of competition (as well as mass sorts) moved to the economy segment of the market. The biggest losses were incurred by the leading three, especially Obolon, which again experienced pressure after reallocation of Efes market share. However, one should already speak of TOP-4. Group Oasis CIS (PPB) became a strong player and competitor to transnational companies. Besides the net sales of many regional medium breweries look rather good and 16-fold cost reduction wholesale trade license for craft brewers opens up a possibility of rapid growth 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