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4-2017

Global hop market

A 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 Russia

Germany 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.

At brewery, cost-cutting was the priority

Speculation swirled about the future of the Anheuser-Busch brewery since the InBev merger. InBev's cost slashing strategy worried area officials, who took notice when InBev contested the real estate assessment of its Colorado brewery.A beverage financial analyst with a London brokerage pegged the cost-cutting strategy of InBev at $2.25 billion, which would "easily cover the bid premium they paid for old Bud."
Around 50 layoffs were anticipated at the brewery as more local cuts were imposed by InBev. At one point last winter the company turned off the heat to reduce costs, relenting when the union complained.
Sources in the union said a contract good through 2014 prevents InBev from closure in all but the most extraordinary circumstance, like increased excise taxes.
An agreement in May with the Teamsters led to some 300 buyouts at all 12 U.S. breweries, including ours. AB InBev said employees "expressed an interest in this type of program" since it included a cash incentive. The company claimed "over staffing," even though the local brewery was down 200 workers from its peak years ago.
Also retiring was Dale Willetts, the last of the first-year hires when the Williamsburg brewery opened in 1971. He had his own take on the InBev takeover.
"I'm not sure this is going to be a good thing, short- or long-term," he said in a June interview. "We have lost a long heritage of American beer-making, and that's a shame. I know In-Bev still wants to make good beer, but with them the most important thing is the bottom line. Profits."
The vulnerability of the plant was reduced to a small number that loomed large. InBev produces beer at 151 breweries in 30 countries, of which James City's represents only 0.75% of capacity.
AB InBev rolled out a campaign to cut water use by 30% globally, but our brewery had already done so by 41%. The unstated question was: Is that enough?
The county was talking secretly about reducing water rates to appease the brewery, but Newport News Waterworks wasn't budging.
They also quietly mulled an idea to use the $50 million water contract with Newport News Waterworks to reprice water, selling it at a discount to the brewery.
Gov. McDonnell interceded on behalf of James City County by reaching out to AB InBev, but executives wouldn't take his phone calls.
Inexplicably but fortunately, Anheuser-Busch InBev came through for the local United Way, meeting its goals for corporate and employee giving.
From a publicity standpoint the year ended badly for AB?InBev. In early December Julie MacIntosh released "Dethroning the King," a book about InBev's hostile takeover. It painted a picture of a dysfunctional Busch family plagued by infighting and stubbornness. Then, just before Christmas, Adrienne Martin, the 27-year-old girlfriend of 46-year-old August Busch IV, was found dead in his St. Louis mansion. 911 tapes revealed that a call for help was made 40 minutes after she was found unrespensive.

TWIST-OFF?SUCCESS
After losing its contract with AB InBev, Toano glass factory Owens-Illinois bounced back with new a new agreement with arch competitor MillerCoors, including exclusive rights to a novelty bottle with interior rifling. By May, Owens-Illinois was back to 75% of operating capacity and planned a fourth production line in September.
It was at 100% capacity in the fall, having branched out into medicine and liquor bottles after assuming a closed Pennsylvania plant's business.
Owens-Illinois announced a $20 million investment, with the help of EDA grants, to diversify the plant and add 20 jobs.

26 Янв. 2011

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