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.
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.
Beer Business Asia #2-2016
Analysis of beer market in China
China’s transition to a “new normal” reality backfired on the brewing industry unexpectedly. Stagnation and subsequent market decline resulted from dynamic social and economic changes. There has emerged a “two speed” market where the medium class significance is growing, yet the share of main beer consumers, “blue collar” is decreasing. Also the inflow of consumers is shrinking, as demographics stopped being a growth driver. Finally, beer is giving way to other alcohol drinks.
However, these problems have a bright side – they cause fast premiumization and beer market diversification. Companies improve their product mix, develop and create new growth points. Driven by westernization wave, international brands, import and craft beers are rapidly gaining weight. In such conditions, the market leader share, namely CR Snow and international companies’ AB InBev and Carlsberg Group is increasing.
Part 1. Beer market – perfect storm or fundamental changes?
Beer and Economy
Beer market performance
• Production and sales
• Prices and market by value
• Market segmentation
Who and how much drinks beer in China?
• How often do Chinese drink beer?
• Age and beer consumption
• Gender and beer consumption
• Income and beer consumption
• Alcohol and social adaptation
• Employment and beer consumption
“Two speed” market
• “The black box” of the Chinese market
• Why is Wang Yong drinking less beer?
Beer among other alcohol drinks
• Do the Chinese drink a lot of alcohol?
• Do the Chinese drink a lot of beer?
• Alcohol consumption structure
• Beer vs Liquors - pressure from two sides
• Beer vs Cocktails – fashion takes toll
Chinese craft beer
Part 2. New reality for brewing companies
Conclusion for Part 1
The Chinese market decline is caused by fundamental factors. The core of active consumers is approaching the “demographic pit” that is, their number is simply decreasing. And this factor will be effective for the next 10 years.
As a result, the brewing industry is losing its positions in the alcohol market. On the one hand, there is the nation ageing and increase in strong drinks consumers. On the other hand, the population that has entered the older age category of liquor drinkers from the beer consumers’ category was not offset by the same number of youth, in other words, beer consumers’ group decreased numerically. The youth group, that is not so big in number, is increasingly interested in bottled cocktails, which are beer alternative. The negative influence on Chinese brewers is exerted also by import beer sales increase.
As for the volumes, the key negative effect on the beer market was obtained from the structural changes in the Chinese economy. They concerned the sensitive branches and groups and inner migrants in the first place. Their incomes and sense of security to a large extent determine the consumption dynamics of affordable mass brands.
The fluctuations in 2013-2014 were accidental and in mainly depended on weather. In 2016 heavy rains could not seriously affect beer sales and production in the first year half, but will substantially influence brewers’ performance in the second year half.
Thus, so far there is not much ground for optimism in outlooks of beer consumption volumes. But its development is progressing in the quality direction, that is, market premiumization is increasing, the craft movement is setting in, and E-Commerce is developing.
Conclusions for Part 2
Judging by leading companies’ reports and NBSC data, we can see, that the market consolidation is going on. The share of the leading five in 2015 grew by 0.7 p.p. to 73.3%. Yet the consolidation rate lost momentum. Previously, the process was driven by acquisitions and now by reduction of sales of independent regional producers.
At the brands level, the consolidation looks as follows: international brands sales are growing and exert pressure on major national brands in urban China. But resulting from the market premiumization, and marketing activity, the production mix is improving. Within sales of national brands, there is a share growth of “special” sorts in medium-priced segment, while the share and sales of “usual” economy sorts are falling. Likewise, the share and sales of the regional brands are falling, excluding those by several companies with a progressive marketing policy.
However, as the experience of other countries shows, in such conditions, the regional companies can develop only in case of distancing from the mass product, for example, promoting “beer patriotism”, selling draft fresh beer and/or unfiltered beer, and trying to work on craft format, etc. Such reformation can take several years, during which “others” share is likely to drop.
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21 Sep. 2016