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.
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.
India. Bihar alcohol ban: SC to hear case today; liquor factories on tenterhooks
While the state government has allowed them to continue operating their factories (mainly to protect 13,000 odd jobs), it does not want them to sell their liquor there.
On 30 September, the Patna high court overturned the liquor ban imposed in Bihar on 5 April and termed the state’s prohibition laws “illegal”, “unreasonable” and “draconian”. Two days later, the state government came out with a fresh ban with harsher provisions, on the occasion of Gandhi Jayanthi.
The Nitish Kumar-led Bihar government also moved the Supreme Court against the Patna high court’s ruling on Monday. An urgent hearing has been set for Friday.
Caught in this uncertainty are companies such as United Spirits Ltd (USL), United Breweries Ltd (UB) and Globus Spirits Ltd which have factories in the state, and some other smaller companies which wanted to bring their spirits there.
Their dilemma can be summarised thus: Does operating in Bihar make financial sense?
“As an industry, it becomes very difficult as there are investments made in ongoing businesses as well as for employment,” said a senior executive at a leading beer maker, on the condition of anonymity. “These bans are unfair as there is no opportunity given to companies to recover money and adds to the issues that the industry faces,” the person said.
In an earlier interview, Abanti Sankaranarayanan, the business head of luxury and corporate relations of USL, warned it might have to make some tough decisions.
“What it does mean is our manufacturing footprint will get reduced because like in the case of Kerala and Bihar, we will have to get out of states where liquor ban has already happened. What else can we do?” Sankaranarayanan asked.
“In Kerala, for instance, the government was telling us not to close. But we said we have no option,” she said, adding that Diageo Plc-controlled USL plans to shutter its unit in the state if the anti-liquor rules prevail.
The owner of brands such as Royal Challenge and Signature whiskies and McDowell's brandy employs around 250 people at its factory there.
USL has other plants that are self-sufficient and that helps in moving out operations from states like Bihar without slowing down production, its managing director and chief executive Anand Kripalu had said in a July conference call.
Some others want to stay, despite the hurdles that might arise when a company’s factories are away from its retail outlets.
United Breweries Ltd managing director Shekhar Ramamurthy is one of them. The company, known for Kingfisher beer, said the decision to stay in Bihar was financially viable.
Globus Spirits is “also still open to utilizing its factories in Bihar to sell to other states”, said Abneesh Roy, Edelweiss Securities Ltd’s senior vice-president in an interview.
Globus Spirits, which did not respond to requests for comments, sells Indian-made foreign liquor such as Country Club whisky, French Castle brandy and local blends such as Nimboo and Narangi.
Tax revenue from liquor sales in Bihar was Rs3,400 crore in 2014-15, according to a November research report by Edelweiss. The brokerage has not published fresh data, but Roy estimated a ballpark Rs4,000-4,500 crore in 2015-16.
“That’s a huge amount of money for a smaller state like Bihar. And of course, from this April it has gone down to zero (because of the ban),” Roy added.
The larger question is whether prohibition actually works in curbing alcohol abuse or ends up making things worse.
“As with the US and other countries who introduced prohibition, they have to roll it back. It doesn’t work. It only increases crime and black market liquor. It doesn’t allow the government to control the quality of liquor that comes in,” said Lisa Srao, chairperson and managing director of alcoholic beverage maker I Brands Beverages Pvt. Ltd.
7 Oct. 2016