Dmitry Nekrasov’s Philosophy — on the Past, Present and Future of Ukrainian Brewing IndustryA meeting with Dmitry Nekrasov always turns into a training course: “Introduction to brewing business“. We are talking to a clever “playing trainer“ a person that can be called a godfather of the Ukrainian craft. He has a dozen of successful projects to his name. Dmitry told us about craft beer in Ukraine, on market cycles, on specifity of operating in retail and HoReCa, on union of Ukrainian brewers and certainly, how a brewery of his own, First Dnipro Brewery is doing.
The market of import beer in Russia: review and databasesThe market of import beer is rapidly growing and changing. But while in the past years it was growing due to brands variety, in 2019 major and affordable brands from TOP-10 were developing actively. It seems that the fact of a brand origin from far abroad counties, even if it is not well known but has moderate price and good distribution provides for million liters of sales in the territory of Russia. Among distributors AB InBev Efes was far behind, yet the role of Baltika and suppliers of the second row got more important. The boom of German brands was followed by stagnation of import from other traditional regions (and Belarus) instead the supplies from Mexico, Lithuania and Asian countries grew considerably.
Russia: Positions of Brewing CompaniesThe review contains an analysis of interim performance of brewers in the first half of 2019. There are rather dynamic changes behind a modest industry growth. Baltika is again experiencing a stage of volumes and market share slid due to competition with AB InBev Efes. Because of the price competition and presence expansion in the modern trade company #2. has come close to the leading position. At the same time sales of Heineken Russia have continued growing which makes the premium part of the portfolio heavier. The market premiumization trend had been also confirmed by import brands. MBC and Zavod Trekhsosenskiy have been the most successful among federal market players. The market share of independent regional brewers and Ochakovo have continued falling as they are being squeezed out by the market leaders at their competitive fields.
Ukrainian beer market 2019: companies and brandsIn 2019 beer production and market have been still fluctuating about zero point. However, the past season was successful for brewers judging by the sales profitability. The price mix has improved due to rapid general market premiumization, as well as its particular aspect, the growth of import beer sales. By the season end AB InBev Efes improved its positions considerably. It turned out that consumers had not forgot Efes brands that had to leave the market, but started to recover rapidly. Against the stagnating market that meant sales decline of other companies, in the first place Carlsberg Group that most of all beneficiated from Efes exiting the market. PPB turned out to be stable to branding activity of its competitor and Obolon kept the same volumes and at the moment it is the absolute leader of the economy segment. The share growth of independent producers took place thanks to leading craft breweries, that so far do not have a big market weight, but they are rapidly gaining it.
Brewing industry in Kazakhstan 2019During the first half of 2019, the majority of Kazakh brewers made their contribution into positive dynamics. Yet it was companies of the lower division, not the two transnational leaders that raised their production and sales. The shares of draft beer and aluminum can which is rapidly squeezing glass bottle out of the market, have been growing. The price segmentation has remained stable despite the substantial rise of retail prices and fluctuations of brand market shares, while the borders between segments have become blurred. The main events in the industry have been: the announced revision of the beer excise policy, launch of BeerKhan brand in the strong beer segment, and most important – purchasing assets of Shymkentbeer by Arasan.
The trend of complication of Russian beer market is going on and in several directions at the same time. The range has got wider, the import and small segments are growing, namely craft beer, alcohol-free beer and special flavor beer. At the same time, all ex-mega brands and light lagers by Russian brewers are experiencing a decline of their shares. AB InBev Efes, Heineken, MBC and Pivzavod Trekhsosenskiy have exceeded the market, Carlsberg was developing slower than the market and Ochakovo as well as some other mid-sized breweries have been cutting down their volumes. To a big extent brewers’ performance was connected to their ability to reach agreement with networks, sacrifice their margin and enter new markets. Craft brewers are facing a serious danger of producers’ registration introduction – de facto licensing. ...
UK: PBD is ‘good for all brewers’
Last year, a number of regional brewers, with Adnams leading the charge, have attacked PBD and even suggested that Chancellor George Osborne could top up his depleted coffers by getting the brewing minnows to pay higher rates of duty.
"There's been a change of Government," Grocock says. "PBD was a significant measure brought in by the last Labour Government. The Government is looking at the whole tax system and that gives the critics of PBD the chance to get a word in."
The new duty system was introduced in 2002 by Gordon Brown when he was Chancellor. It proved a vital shot in the arm for small brewers. Many were threatened with closure as they struggled to compete with big brewers who enjoy "economies of scale", such as high-tech brewing with less wastage, that allows them to produce beer more cheaply than the micros.
PBD has been tinkered with since 2002. Today, the measure has a ceiling of 60,000 hectolitres. If a brewer produces more than 60,000 hectos a year, he gets no duty relief.
At the other end of the scale, brewers who make no more than 5,000 hectos a year get 50% duty relief on each barrel produced.
But PBD has a taper. The closer a brewer gets to the 60,000 ceiling, the more duty he has to pay - but there are clear advantages if you stay beneath the ceiling.
Since the introduction of the scheme, craft brewing has flourished. There are now more than 700 breweries in Britain, twice as many as when the Campaign for Real Ale (CAMRA) was formed 40 years ago. The choice of beer has never been greater. Nevertheless, the critics of PBD are gaining in volume and putting pressure on the Government for change.
Grocock is saddened by the attacks because he feels it has fractured the unity of a brewing industry that needs to have all its wagons in the circle at a time of declining beer volumes, an alarming rate of pub closures and a hostile media that blames beer and pubs for social problems connected to alcohol abuse.
"SIBA feels the pain of pub problems," he says. "Our members produce 85% of their beer in draught form." He argues that PBD introduced a level playing field for smaller brewers. "Micros don't enjoy the same economies of scale as bigger brewers and there are other factors to take into account.
"The raw costs of producing beer have to be set against bigger brewers owning pubs - both tenanted and managed - along with wine and spirits sales. A micro will have only production costs.
"In Germany, the duty on beer is around ?10 a barrel, which means beer is cheap for consumers while wine and spirits are dear.
"In Britain, beer is competing with all other types of alcohol, on top of which cider has a lower rate of duty than beer."
He's keen to hold out an olive branch to his critics. "The solution to the problem is not to attack PBD or call for its abolition but for all brewers to campaign for a reduction in the overall duty rate. SIBA believes duty is too high for all brewers. There should a reduction in VAT on beer as well - beer and pubs are part of the hospitality industry and should get more Government support.
"France has reduced VAT on beer and, if the French can do it, it must be a viable proposition.
"PBD has to be seen as an investment in an industry, not a tax give-away. Craft brewing ticks all the ethical boxes - it provides local employment, uses local ingredients and has a low-carbon footprint.
"And the growth of craft brewing has encouraged diversity, experimentation and innovation." With a wry smile, he points out that his biggest critic, Adnams, has widened its range of beers considerably and has even installed a small distillery.
"The success of the micros has revolutionised brewing. Brewers are no longer stuck in the groove of just making premium bitter."
He dismisses the argument - put forward in the MA in December by Paul Wells and Nigel McNally of Wells & Young's - that there are too many beers on the pub bar and this will lead to a fall in quality.
"I'm tired of hearing that. SIBA is committed to quality. We have a brewing support line and a technical services department to back up our members. And we're nudging our members to take full responsibility for dispense equipment in the pubs they supply."
Grocock is happy to talk to his critics but he won't budge on PBD.
"We should celebrate the diversity that it has introduced.
"Let's get rid of big-brand chauvinism and recognise that drinkers are promiscuous and are looking for something different on the bar. PBD has transformed the beer market - and that's good for all brewers."
26 Янв. 2011