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. For PE investors, craft beer emerging as new area of interest
Earlier this year, Mint reported that Hong Kong-based private equity (PE) firm TR Capital Partners, LLC is close to investing about $10 million in B9 Beverages Pvt. Ltd, maker of the popular Bira 91 craft beer. Founded in 2015 by Ankur Jain, founder and chief executive officer, B9 Beverages, has angel investors such as Snapdeal founders Kunal Bahl and Rohit Bansal; Zomato founder Deepinder Goyal; and ChrysCapital co-founder Ashish Dhawan. Venture capital firm Sequoia Capital invested $6 million in Bira in January.
BTB Marketing Pvt. Ltd which runs The Beer Cafe, is looking to raise around $40 million from PE firms to expand its presence across the country, Mint reported in February. In October 2015, Mumbai-based microbrewer The White Owl Brewery Pvt. Ltd raised Rs10 crore from angel investors, including Amit Patni Group’s family office RAAY and Arihant Patni to fund expansion plans.
The growing interest of investors is primarily because of the huge market opportunity, experts say.
In 2008, there were just 23 microbreweries across the country and now there are 50-60, and many more are expected to come up, said Rohit Singh, managing partner at Dexter Capital Advisors. Maharashtra and Haryana were the first Indian states to allow microbreweries.
India is a market where per capita consumption of beer in India is still growing, say industry experts. Even in more mature markets like the US and Europe, the number of microbreweries has almost doubled in the past five years.
“We have seen that it is growing faster than the traditional beer in the market. Traditional beer would be growing at around 10-12%, then craft beer would be growing 15-20%. It is obviously at a nascent stage, but it will continue to grow,” Rohit Singh said.
Craft beer is made in a traditional, non-mechanized brewery and sometimes contain local flavours and ingredients that are different from the standard formulation.
“So, it could be any variant, any local ingredients flavours which are brought in such as honey, coffee, cardamom, saffron and chocolates, etc. to give customers endless options to try. It is also an interesting trend that is picking up fast and will find takers especially in the larger cities and among younger people, who are open to experimentation and who have seen craft beer in the West,” said Pragya Singh, vice-president at retail consulting firm Technopak Advisors.
“Craft beer is known for authenticity and it is made in a traditional way. Which means that it is giving consumers a choice in terms of flavours and varieties. So, it taps into this ready market which is already adapted to beer and takes it to the next level,” she added.
In a developing country like India, beer is still an emerging opportunity, said Pankaj Gupta, senior practice head, consumer and retail at Tata Strategic Management Group.
“The consumer is looking for choice and indulgence, whether it is food or beverage. The top end of the market, which is looking to pay premium that is where this craft beer falls in,” Gupta said.
A large part of the craft beer market usually starts with microbreweries that are inside pubs. “One of the advantages of being on-site or from a pub kind of an opportunity, there is no need of distribution channels, large investments in brand building to make the product a success,” he added.
The overall beer industry is currently Rs25,000 crore and is projected to reach about Rs40,000 crore by 2020.
“The growth in the craft beer segment is almost 1000%. We feel that it will be 10% of the size of the overall beer market in five years from now,” said Rahul Singh, founder and chief executive officer of The Beer Café.
So, what is fuelling such hyper growth? “Reason for that is people are actually enjoying their drinks rather than just drinking it. Taste and flavour have become far more important than just drink. Beer was always a young social college drink. Craft beer has added flavour in the taste and the palate worldwide,” said Singh.
To take advantage of the rising demand for craft beer, several microbreweries have opened in India over the last couple of years and a few existing brewers have strengthened their presence with the launch of new variants.
The names include Bengaluru-based Arbor Brewing Co., Pune-based breweries such as Irish Village, Doolally Brewing Co., Effingut Brewerkz, TJ’s BreWorks, Mumbai-based Gateway Brewing Co., The Barking Deer, The White Owl and Brewbot.
11 Oct. 2016