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. Heineken Buys a Brewery From Carlsberg in Southeast Asia’s Thirstiest Beer Market
With a thriving street-side cafe and bar culture, young population and rising middle class, Vietnam is luring brewers such as Heineken, Thai Beverage PCL and Asahi Group Holdings Ltd. to expand in the country. Interest is also being piqued by the government’s plans to offload lucrative assets, with Carlsberg in line to more than double its stake in state-run Hanoi Beer Alcohol Beverage Corp. or Habeco.
“The Vietnamese beer market is of great interest to other international players, such as those from Japan and Thailand,” said Dominic Scriven, chairman of Dragon Capital which manages about $1.5 billion of investments. “This in general is reflective of greater strategic interest across many sectors from foreign investors.”
Beer consumption in the Southeast Asian country jumped about 40 percent in 2015 from 2010, according to the Vietnam Beer Alcohol Beverage Association. Vietnamese guzzlers are expected to consume more than 4.04 billion liters of beer this year, the most in the region and up from 3.88 billion liters in 2015, according to Euromonitor International.
Economists predict Vietnam will be among the world’s fastest-growing economies in 2016 as it benefits from a manufacturing industry that’s grown in importance over the years. Its citizens of legal drinking age, 18 and above, is expected to increase to 72.4 million by 2021 from 68.7 million this year, according to Euromonitor.
“The growth of the beer market in Vietnam over the past few years is nothing short of amazing, and it shows no sign of slowing down,” said Andy Ho, who oversees $1.5 billion as the managing director of VinaCapital in Ho Chi Minh City.
Heineken in July acquired Carlsberg Vietnam Brewery-Vung Tau in the south Vietnam port city. Carlsberg Chief Executive Officer Cees’t Hart said the sale of the facility would allow the Danish brewer to concentrate on its existing territory in the northern part of the country, according to a Bloomberg transcript of an Aug. 17 earnings call.
Amsterdam-based Heineken, which is the second-biggest brewer in Vietnam, has seen its shares rise 0.5 percent year to date, while Carlsberg, headquartered in Copenhagen, rose 2 percent. The Vietnam Stock Index rose 17 percent over the period.
“We have a footprint, which we would like to improve,” Hart said, referring to Habeco, based in the capital Hanoi in north of Vietnam, in which Carlsberg is awaiting the government’s go-ahead for it to raise its 17 percent stake to 30 percent. “With regards to Vietnam, indeed, we focus on the territory where we are.”
Another attraction of Vietnam’s beer market is that it’s less dominated by local brewers compared with Asian countries such as Japan and Thailand, where home-grown brands take up about 90 percent of volume, said Euromonitor analyst Andrea Lianto. By contrast, Vietnamese brewers accounted for 63 percent total volume shares in 2015, giving foreign companies room to grow, she said.
Still, there’s risk for foreign investors as Vietnam is being hit by the worst drought in 30 years and falling oil revenue, making the country’s 2016 target for growth of 6.7 percent “hard to reach,” Vu Hong Thanh, head of the National Assembly Economic Committee, said last month. The economy is expected to expand at 6.3 percent this year, according to the median estimate of economists surveyed by Bloomberg.
Vietnam’s government is also considering selling as much as 100 percent of its stake in state-owned Saigon Beer Alcohol Beverage Corp., known as Sabeco, a long-awaited divestment that has attracted interest from Japanese and European brewers in the past.
Sabeco, brewer of Saigon Beer and 333 Beer, is the country’s largest brewer by sales with 40 percent of the market last year, followed by Heineken and Habeco with 20 percent shares each, according to Nguyen Van Viet, chairman of the Vietnam beer association. Carlsberg is in third place with 10 percent, he said.
“Urbanization there is still increasing pretty fast. The level of premium is not where it is in other countries even in Asia,” Heineken Chief Financial Officer Laurence Debroux said in an Aug. 1 earnings call. The Dutch brewer’s performance in Vietnam has been “stunning,” she told Bloomberg Television.
29 Aug. 2016