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.
Vietnam’s Major Breweries Set To Be Up For Sale
The central government recently signaled it would float Sabeco and Habeco, Vietnam’s two market share-leading breweries, as part of a push to divest public ownership of a number of leading State Owned Enterprises (SOE). The two breweries are among the few profitable SOEs, and would make an attractive target or foreign investors.
At present the Vietnamese government owns 89% of Sabeco and 82% of Habeco. The two companies have been ordered to first go public on the local stock exchange before the government will begin divesting shares. This is apparently in order to prevent the local market from overheating.
There are several international and regional brewing giants who it has been speculated are potential buyers of the state-owned companies. Thai Beverage PLC has openly expressed a bid for Sabeco that may be worth as much a $2 billion, while Asahi, SABMiller and Heineken are also rumored to be interested.
Heineken is already a major player in Vietnam with a 60% stake in Vietnam Brewery Limited, another leading beverage producer. Carlsberg meanwhile already has a 10% stake in Habeco worth an estimate $400 million.
There is an interesting correlation between the growing middle class in Vietnam and the consumption of beer. Over the past five years, consumption has doubled to more than three billion liters per year. The Vietnam Beer and Alcohol Beverage association predicts this will increase by another 25% to four billion liters annually by 2020. This tracks with a similar rise in median incomes in the country.
On the ground, the competition for Vietnamese beer drinkers continues apace. Beer companies are dishing out everything from marketing collateral; such as signage, coasters and branded umbrellas; to significant cash bonuses to venues that give them exclusive distribution deals or prime space in their fridges.
Heineken and Japanese brewer Sapporo in particular are involved in an arm wrestle for dominance in the local market, while Singapore’s Tiger Beer is also in the race. Given monthly sales quotas are met, some bar owners can see anything from $13,000 to $25,000 in annual bonuses from the beer companies. This is big money in a country like Vietnam.
There is also possibly a public health downside to this increased beer consumption in the country, with rates of stomach cancer, often linked to heavy alcohol consumption, on the rise. Recent health ministry statistics show it is the second most common form of cancer among men and third among women in Vietnam. More alarmingly, it is increasingly afflicting those younger in age.
Dr. Vo Duy Long from the the Medical University Hospital in Ho Chi Minh City said they had in recent years received on average 300-400 new cases of stomach cancer. Long said there had been an increase in cases of stomach cancer among young adults under 40 years of age.
19 Oct. 2016