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.
Vietnam. Foreign Investors Wait Major Vietnam Divestment With Bated Breath
While State Capital Investment Corporation (SCIC) has announced its intentions to sell stakes in major firms Vinamilk, and the Saigon Alcohol Beer and Beverages Corporation (Sabeco), investors are waiting with bated breath for these plans to come to fruition.
According to The Economist Vinamilk, considered the best-run firm in Vietnam with profits growing by nearly a third each year over the past decade, earned US$420 million in pre-tax profits and US$1.8 billion in revenue in 2015. As Vietnamese still drink far less milk on average than in neighbouring countries, there is ample room for Vinamilk to grow further. The company currently has a market value of over US$9 billion.
It comes as no surprise then that foreign investors in particular are eyeing the company closely. The SCIC owns 44.7 per cent of Vinamilk’s shares, which is actually low compared to government stakes in other big firms. This figure is set to decrease further by the end of the year.
Vietnam Net reports that SCIC deputy CEO Nguyen Hong Hien told a conference on October 25 that the organisation will sell 9 per cent of its Vinamilk stake in late November or early December. This will be the first tranche of a gradual full sell-off of the State’s ownership in the dairy giant.
SCIC has hired Morgan Stanley Asia Limited, Saigon Securities Incorporation (SSI) and the VinaCapital Corporate Finance Vietnam Company Ltd. to advise it on the sale.
Thailand brewing giant ThaiBev is thought to be one of the front-runners for buying additional shares when they become available. The Thai conglomerate already owns 11 per cent of Vinamilk through Fraser and Neave. Like everyone else though, they will have to wait until more details regarding the divestment are confirmed.
Vietnam Brewers Await
The other major prize in SCIC’s divestment push is Habeco, or the Hanoi Beer Alcohol and Beverage Joint Stock Corp. Along with Sabeco the two firms command roughly three-fifths of the Vietnam beer market.
Figures from the Vietnam Beer Alcohol Beverage Association (VBAB) show that the country quaffed nearly four billion litres of beer in 2015, ranking third in Asia behind China and Japan. This makes both serious money-makers, and SCIC holds dominant positions in both – 90 per cent in Sabeco and 82 per cent in Habeco. Sales of these stakes could net the government over US$2 billion in dividends according to The Economist.
So far no dates have been confirmed for these sales, but the government has stated that they will take place next year.
According to Viet Nam News, Prime Minister Nguyen Xuan Phuc has requested that both companies be listed on the stock exchange before divestment takes place in order to guarantee transparency. However, as VietJet Air’s frustrating efforts to go public have illustrated, this is easier said than done.
Obstacles remain for foreign investors wishing to get a piece of the action in Vietnam.
While the government has provided a broad timeline for divestment of its interests in Vinamilk, Sabeco, and Habeco, specific dates remain elusive. At the same time The Economist alludes to rumours of ‘golden shares’, which would allow the government to retain control of their cash cows even after getting rid of most of its shares.
Thus far these are no more than rumours, but the authorities are understandably hesitant to offload such lucrative assets, even as public debt skyrockets.
If Vinamilk’s 9 per cent sale goes according to plan, within the next 90 days or so, foreign investors will have renewed confidence that Vietnam is serious about opening its most successful companies to outside money. It will also provide a rough yardstick as to how successful VietJet’s much talked about IPO will be… if it ever makes it to the runway.
3 Nov. 2016