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.
The uneven development of Carlsberg Asian markets in 1H2016: strong growth in India and Laos with 8% volumes decline in China
According to the first-half results, Asia region continued to deliver solid organic revenue growth (+4%) thanks to a strong 7% price/mix and despite a negative volume development in China. In addition, organic operating profit growth was a healthy 6%.
Net revenue in Asia grew organically by 4% as a result of 7% price/mix offset by an organic volume decline of 3%. Reported net revenue declined by 4% due to a negative currency impact, mainly from China, Malawi, Malaysia and India.
The solid price/mix was due to premiumisation efforts on local power brands, reduction of lowpriced products in China and growth of our premium propositions. The latter was particularly positively impacted by the Tuborg brand, which grew 17%.
Asian markets had a mixed volume development. Carlsberg achieved particularly strong growth in India, Nepal and Laos, while its volumes in China declined following the market decline and closure of breweries. Organic operating profit grew by 6% and the reported operating margin improved by 60bp. The profit improvement was driven by Funding the Journey benefits, including positive price/mix, tight cost control and brewery closures in China.
Chinese volumes declined organically by 8%, slightly more than the beer market. While Carlsberg gained market share in most of its key provinces, last year’s decision to restructure Eastern Assets and the subsequent closure of breweries resulted in a volume decline of approximately 25% in the affected provinces. Supported by the growth of our premium portfolio, notably Tuborg and Kronenbourg Blanc, price/mix grew by 6%. Profitability in China improved significantly due to tight cost control and the restructuring of Eastern Assets.
In spite of the alcohol ban in the Bihar state as of April, the Indian beer market grew by an estimated 5%. Carlsberg Indian business continued to grow, delivering volume growth of 17% and price/mix improvement of mid-single digit percentages. Carlsberg Elephant grew significantly for the six months, and the Tuborg brand continued its strong growth trajectory. Profitability improved significantly. The Vietnamese market grew by an estimated 8% and we gained market share. Nevertheless, Carlsberg’s volumes declined slightly, due to stocking in Q4 last year ahead of the Têt festive season.
The launch of Tuborg in northern Vietnam at the beginning of the year has delivered promising initial results ahead of plan. Volumes in Malaysia were impacted by the excise tax increase at 1 March. Price increases and good cost control ensured solid financial performance.
Carlsberg business in Laos grew beer volumes while the water and soft drinks business was under pressure due to intensified competitive activity. Profits and margins developed positively.
Nepal delivered very strong performance due to market growth and price increases in addition to cycling easy comparables because of last year’s earthquake.
17 Aug. 2016