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.
Vietnam. Saigon Beer Can Quench Asahi’s Thirst
AB InBev and SABMiller, Heineken, Asahi, Kirin, ThaiBev and Singha Asia have all registered to bid for stakes in state-owned Sabeco, maker of Saigon Beer and 333. With a price tag of at least $1.8 billion and a government facing a ballooning budget deficit, interested parties don't need to beat down the door.
"The government wants to sell its stake as soon as possible," Sabeco CEO Le Hong Xanh told Bloomberg News. "All we care about is who will pay the most."
Vietnam had one of the world's fastest rates of growth in GDP per capita during 2015
Vietnam has real attractions for brewers, whose revenue tends to be linked to the size and wealth of a country's key beer-drinking demographic, its working-age population.
The Southeast Asian nation was one of the world's 10 fastest-growing economies in 2015, and its demographic statistics are even more attractive. By 2030, it's likely to add about five million people between the ages of 15 and 64, giving it a bigger working-age population than Japan:
Vietnam's working-age population will overtake Japan's by 2030
Japan is the player to watch in this contest. Most brewers based in rich countries with stagnant local demographics have worked hard in recent decades to give themselves global reach, but Japan's local heroes have fallen behind. Asahi makes 86 percent of its revenue at home, followed by Sapporo at 82 percent and Kirin at 65 percent.
Drinking at Home
Domestic sales make up a bigger share of revenue at Asahi than at any other big rich-country brewer
It's Asahi that most needs a deal of this sort. Kirin has already struck alliances with Tsingtao and the Philippines' San Miguel in Asia, and it owns Brazil's second-biggest brewer, the former Schincariol. Asahi's biggest deal to date, an acquisition of AB InBev's Peroni and Grolsch brands in Europe, makes much less sense.
Vietnam's government doesn't look to be asking an excessive amount for its 90 percent stake, either. Sabeco has a 40 percent share of the local market, but the $1.8 billion value the state has put on the business is only 11 times forecast 2016 net income of 3.76 trillion dong ($169 million). That's a steal relative to the median 40 times net income multiple in 17 brewery deals worldwide over the past five years.
Analysts expect Asahi to generate 214 billion yen ($2.1 billion) of free cash flow by the end of 2018, so it certainly has the money to make an acquisition. Its problem is slow top-line growth: After seeing revenue climb 27 percent in the four years through 2015, forecasts show a 4.1 percent increase in the same period to 2019.
Vietnam is still something of a frontier market, and Asahi's overseas forays haven't always ended happily. But in this instance it shouldn't be put off by the substantial lineup of interested players. There may be a crush at the bar, but Asahi is a company badly in need of refreshment.
9 Sep. 2016