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.
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