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.
Asahi Mixes Drinks as Japan’s Beer Market Shrinks
In an era when Budweiser is sold by a Belgium-based company and California’s Lagunitas IPA is partly Dutch-owned, Japanese beer has remained in Japan’s hands, away from the global consolidation party.
The head of the biggest-selling Japanese beer maker says he wants to keep it that way.
“The subtle taste and quality of beer that the Japanese favor can be created only under Japanese management,” said Akiyoshi Koji, president of Asahi Group Holdings Ltd., in an interview. “If a foreign company takes control of a Japanese maker, there is a risk of the brand’s credibility being harmed.”
The planned merger of the world’s two biggest beer makers, Anheuser-Busch InBev NV and SABMiller, has brought renewed attention to global consolidation. Japan is something of an anomaly because its top players have been the same for decades. Tokyo-based Asahi and its leading rival in Japan, Kirin Holdings Co., are minnows globally but big fish in their own pond.
That pond is getting smaller. Japan’s population is shrinking and younger consumers are heading toward wine or cocktails instead of beer. Shipments of beer and related brews including low-malt beer came to about 425 million cases in 2015, compared with a peak of 573 million cases in 1994, according to the Brewers Association of Japan.
The answer, say Asahi and its main Japanese rivals, is to branch out into other drinks and try to build a global business focused on premium brands.
However difficult it may be for foreigners to re-create the taste of Japanese beer, Mr. Koji is betting billions of dollars that his company can do so with Italian and Dutch beer. Asahi plans to acquire European brands Peroni and Grolsch for $2.9 billion from SABMiller, divestitures that SABMiller is making to get regulatory clearance for the Anheuser-Busch InBev deal.
“We aren’t planning to engage in a head-on fight with products in a similar price range” to those from AB InBev, Mr. Koji said. “We would like to challenge our global competitors with value-added products.”
Mr. Koji said Asahi had room to make further acquisitions, although he declined to say whether he was interested in Eastern European assets of SABMiller that are also up for sale. An Asahi spokesman said the company could spend roughly $3 billion to $4 billion for further acquisitions and still stay within its debt target.
The Anheuser-Busch InBev-SABMiller combination would create a giant brewer with around 30% global market share by volume. That compares with 1.2% for Asahi, putting it in 10th place, according to Euromonitor.
The megamerger could pose “immense competition to the Japanese beer companies,” said Ranjan Kumar Singh, an analyst at Allied Market Research. “The big players are using these strategic moves to boost profitability by cutting costs.”
Asahi is still growing, despite slower sales of its flagship Super Dry brand. The company has recently posted steadily rising revenue and profit, with sales of ¥1.86 trillion ($18.2 billion) in 2015. Its market capitalization of ¥1.6 trillion slightly exceeds Kirin’s.
It has kept growing partly by diversifying into products such as wine and baby food, and by adding beer alternatives that cost less because of lower taxes. These include “new genre” products brewed from peas or corn to avoid Japan’s taxes on malt.
Such peculiarities in taxes and distribution have turned the nation’s beer market into another example of what locals call the Galapagos phenomenon, in which Japan evolves in isolation from global trends. That is another reason Mr. Koji is confident foreigners wouldn’t try to buy Asahi.
“I wouldn’t say there’s no risk of being acquired,” he said. “But for foreign brewers, it would be extremely difficult to buy a Japanese maker and further boost profitability.”
AB InBev set up an office in Tokyo about a year ago to work more effectively with local partners that handle its beer brands in Japan, regional director Toon Van der Veer said in an email. He declined to comment on whether AB InBev would be interested in directly challenging Japanese beer makers in their home market.
Japan’s other top beer makers, which include Suntory Holdings Ltd. and Sapporo Holdings Ltd., have tried similar strategies of holding on to their core beer market at home while branching out abroad.
“AB InBev’s acquisition of SABMiller could change power relationships of the beer industry. However, it won’t directly affect Suntory because we mainly focus on premium beer, as well as soft drinks, health food and other alcohol,” Suntory Holdings president Takeshi Niinami said in an email.
Suntory, which has long had a more diversified portfolio than Asahi or Kirin, further broadened its business through the $16 billion acquisition of U.S. whiskey maker Beam in 2014.
Kirin, which bought a 55% stake in Myanmar Brewery for $560 million last year, says it is focusing on cost cuts to counteract a shrinking home market. Part of its strategy has echoes of the global consolidation trend, but it is consolidation with a Japanese flavor: combining certain operations rather than entire companies. Kirin and Asahi recently said they would open a joint logistics center and share trains to ship their beer beginning next year.
1 Sep. 2016