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.
Part 1. Beer market – perfect storm or fundamental changes?
Beer and Economy
Over 2007-2016, the brewing industry reflected the situation in the country. One can clearly see the correlation between the beer production dynamics and the GDP.
Thus, through to 2007, the beer production in China was growing at two-digit rates. Amid the recession of 2008, its dynamics slowed down sharply, but then recovered at the same speed. The brewing industry was developing in tune with the cycle of the Chinese economy.
However, after the peak year 2011, the dynamics of beer production went unexpectedly down. Companies’ reports and business press gave objective reasons, namely the weather in the third quarter of 2012 was unusually cold and wet. But could it actually play such an important role?
It is obvious now, that the decline in brewing was transient and resulted from the accumulated structural economic and social problems of China and from moving to the “new normal” reality which is currently widely discussed in the business press. The slower growth of GDP affected the beer market too.
Population’s income fluctuation is considered to be the main reason for consumer preference change. Beer is not an essential commodity; it does not satisfy a basic need. Basing on this, it would be logical to suppose that the lower production level of beer was in mainly caused by income decline among Chinese citizens.
But if we look at statistics of the living standards of the Chinese after 2011, we’ll note a discrepancy. Unlike the GDP, beer production dynamics is not directly connected to the official income. Population’s incomes did not decline so sharply, on the contrary, people’s wellbeing was still growing, though slowly.
If we consider this connection basing on a shorter period of time, for example, quarterly over 2014-2015, we will not find any dependence either. Obviously, the change in the standard of living (according to the official statistics) was not the key impact factor in this case.
A certain improvement of the dynamics in 2013 goes beyond the context of the link between the beer market and GDP. And in 2014 there was a significant drop in brewers’ performance, while the official dynamics of the GDP downturn growth rates became smoother. That is when the industry faced a decline for the first time. Starting from 2014, monthly operational data on beer production were mostly negative.
Thus, 2014 turned out to be the moment when the problems of Chinese brewers became obvious. But even years 2012-2013 contradicted the general context of the previous four years and became critical in the riot development of the brewing industry.
In order to make the situation clear, one has to define the fundamental reasons for the change in beer consumption and distance them from local fluctuations.
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21 Sep. 2016