The beer market dynamics in Russia is approaching zero, yet major brewers are divided into those who developed considerably in 2017 and those who considerably reduced their volumes. For instance, company Efes has managed to substantially extend their sales due to restrained pricing policy and activity in the modern trade. Heineken has also demonstrated an excellent performance promoted by significant increase of advertisement budgets launching a non-alcohol sort of the title brand and unusual activity in the economy market segment. Carlsberg and AB InBev have been focusing on margins and lost a market share of their inexpensive brands. Serious dependence on PET package and mass enthusiasm about Zhigulevskoe have negatively impacted the most of big regional brewers, that have been for the first time pressed by the leaders in the key sales channels, especially in Volga and Central regions. In the small business there has been a noticeable slowdown in appearing of new restaurant breweries, yet the number of craft breweries has been growing rapidly. In 2018, the beer market is likely to grow a little, while the share of AB InBev Efes may decrease due to the integration. ...
“Catalogue of Russian Beer Producers 2018” includes 1070 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft microbreweries.The catalogue includes 32 large breweries, 75 regional breweries, 693 industrial mini- and microbreweries as well as 270 restaurant breweries. ...
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.
AB InBev, Asahi Among Suitors for Vietnam’s Biggest Brewery
Dutch brewer Heineken NV, Anheuser-Busch InBev NV and its merger partner SABMiller Plc, as well as Japan’s Asahi Group Holdings Ltd. and Kirin Holdings Co. are among seven foreign companies that have registered to bid for stakes in Saigon Beer Alcohol Beverage Corp., also known as Sabeco, its chief executive officer Le Hong Xanh said.
“Sabeco doesn’t care if the buyer is an international or domestic company,” Xanh said in an interview at the company’s Ho Chi Minh City headquarters. “All we care about is who will pay the most. The government wants to sell its stakes as soon as possible.”
The deal is garnering interest from foreign beer brands attracted by Vietnam’s young population and rising middle class in one of the world’s fastest-growing economies. Its government is divesting stakes in its two market-leading brewers as a growing budget deficit forces the leadership to accelerate a plan to reduce holdings in state-owned firms.
Thailand’s Singha Asia Holding Pte. and Thai Beverage Pcl have also signed up to take part in the Sabeco auction, while Vietnamese brokerage Saigon Securities Inc. has joined the latest list of local potential buyers, said Xanh. That line-up is not permanent, and companies could drop out or more could join the list, he said.
Asahi “is interested in acquiring Sabeco,” its Tokyo-based spokesman Takuo Soga said by telephone. AB InBev, Kirin and Heineken declined to comment. Spokespersons for Saigon Securities, Thai Beverage and Singha-owner Boon Rawd Brewery Co. weren’t immediately available for comment.
Asahi shares rose as much as 1.1 percent in early Tokyo trading Thursday, before paring those gains to fall 0.1 percent, while Kirin declined as much as 1.6 percent. Thai Beverage fell as much as 1.5 percent in Singapore.
The Ministry of Industry and Trade announced Aug. 31 the government’s plan to sell its entire 89.59 percent stake in Sabeco, which it has valued at $1.8 billion, and its 82 percent holding in Hanoi Beer Alcohol Beverage Corp. for $404 million. Sabeco will be sold in two tranches in 2016 and 2017, while Hanoi Beer, or Habeco, will be divested this year, it said.
“There aren’t that many markets where foreign brewers would have a chance to secure an interest in a market-leading brewer,” said John Ditty, managing partner of KPMG Vietnam’s deals advisory unit. The government’s valuation of its stake isn’t “too much,” he said in an interview in Ho Chi Minh City.
Sabeco has strong brands and an existing distribution network, so what investors “have to decide is how much of a premium that is worth,” Ditty said.
The brewer expects net income to rise 10 percent to about 3.76 trillion dong ($169 million) in 2016, from 3.42 trillion dong it reported in 2015, double its target growth rate for the year, Sabeco’s Xanh said. That would put the Vietnam government’s valuation of its stake at about 11 times net income, compared with the median of about 62 times for brewery acquisitions announced worldwide in the past three years.
Some of the government’s stake in Sabeco will be listed on the Ho Chi Minh City Stock Exchange in as soon as 45 to 60 days, Xanh said. After that, the government will auction 53.59 percent in the company within the year, and the remainder in 2017, he said. The proportion to be offered publicly will be decided by the ministry, Xanh added.
Prime Minister Nguyen Xuan Phuc, who said Aug. 29 Sabeco and Habeco must be publicly listed before the state divests them, will need to approve the entire process, Xanh said. The government wants the market to determine the price of stakes in Sabeco, and its listing will be overseen by Maybank Kim Eng Securities Thailand Pcl, he said.
Sabeco, brewer of Saigon Beer and 333 Beer, prefers to have several major shareholders, and its auction could attract more domestic companies, some of which could form joint ventures to pool resources for their bids, Xanh said. He declined to name other interested local parties.
In the case of Habeco, Danish brewer Carlsberg A/S has been awaiting the government’s permission to raise its 17 percent stake to 30 percent in the smaller state brewer, based in the capital Hanoi in Vietnam’s north.
Foreign brewers are raising their stakes in Vietnam as beer consumption in the country rose 6 percent in 2015 and is expected to keep growing until 2020, according to Euromonitor International. By contrast, key Asian markets such as China, Japan, Thailand, and the Philippines declined last year.
“Vietnamese like to get together and whenever they do, beer is a must to drink,” Xanh said.
8 Sep. 2016