The beer market dynamics in Russia is approaching zero, yet major brewers are divided into those who developed considerably in 2017 and those who considerably reduced their volumes. For instance, company Efes has managed to substantially extend their sales due to restrained pricing policy and activity in the modern trade. Heineken has also demonstrated an excellent performance promoted by significant increase of advertisement budgets launching a non-alcohol sort of the title brand and unusual activity in the economy market segment. Carlsberg and AB InBev have been focusing on margins and lost a market share of their inexpensive brands. Serious dependence on PET package and mass enthusiasm about Zhigulevskoe have negatively impacted the most of big regional brewers, that have been for the first time pressed by the leaders in the key sales channels, especially in Volga and Central regions. In the small business there has been a noticeable slowdown in appearing of new restaurant breweries, yet the number of craft breweries has been growing rapidly. In 2018, the beer market is likely to grow a little, while the share of AB InBev Efes may decrease due to the integration. ...
“Catalogue of Russian Beer Producers 2018” includes 1070 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft microbreweries.The catalogue includes 32 large breweries, 75 regional breweries, 693 industrial mini- and microbreweries as well as 270 restaurant breweries. ...
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.
Heineken NV Acquires Five Breweries
The company, which in 2009 accounted for 64 per cent of Nigeria's 16.5 million hectolitre beer market, the second largest market in Africa, announced the buy-over of Sona Group, makers of Goldberg larger, Malta Gold, Williams Dark Ale, among others for an undisclosed sum.
This, according to agency reports gives it controlling stakes in five of the six breweries within the group including Sona (which brews brands like Goldberg, Williams Dark Ale and Malta Gold); International Beer & Beverages Industries Limited based in Kaduna; Benue Breweries; Life Breweries Limited, Onitsha; and Champion Breweries, Uyo, Akwa-Ibom State.
This has helped the NB expand its capacity by about a third of Nigeria's beer market, which has continued to grow annually by nine per cent in the 10 years to 2009. The acquisition is expected to enhance the company's capacity by 3.7 million hectolitres to alleviate capacity constraints in the market, while improving the geographic spread of its production.
With a capacity of about 12 million hectolitres in Nigeria, the company said in a statement "this important move reflects Heineken's strategy of increasing our exposure to and growth from developing markets. Nigeria is one of the world's most exciting beer markets and one of the most important countries for Heineken."
The statement added that Heineken, which holds majority stakes in NB and Consolidated Breweries Limited, is in talks with the companies to "explore the possibility of consolidating the newly acquired breweries into its existing business structure in Nigeria," this year.
"The opportunity to increase capacity and expand into new geographies will significantly strengthen our platform for further growth in this highly competitive market place," Corporate Affairs Adviser for NB, Ageni Yusuf, told Bloomberg on phone from Lagos.
The acquired companies, Heineken he added, will continue to provide contract brewing services to NB and Consolidated Breweries markets of '33' Export Lager Beer, Hi-Malt non-alcoholic drink and the very successful introduction of Turbo King, Dark Ale.
As the level of confidence in the Nigerian capital market builds up in the banking subsector this year following government's intervention in the industry, trading activities in other sectors as well have shown that investors are also seeking safe haven in Breweries and Food/Beverages sectors.
Analysis of trading activities in the two sectors, in terms of traded volume, since transaction reopened at the Nigerian Stock Exchange (NSE) this year, showed an increase of 45 per cent in Breweries' stocks and an increase of 250 per cent in Food/Beverages' stocks when compared to the volume traded fortnight to the end of last year.
Within two weeks, trading in Breweries sector grew from 10.9 million shares to 15.8 million while Food/Beverages sectors moved up from about 58.1 million shares to 202 million.
Bola Oke, a finance analyst at WealthZone Company, an investment management firm, said equities in the Breweries and Food/Beverages sectors have always been the toasts of retail investors as well as fund managers.
A stockbroker at Eurocomm Securities Limited, Virginus Agada, said that companies into fast moving consumable goods and brewery business are good stocks to buy because "when people are happy, they drink and eat to celebrate and when they are sad they still drink and eat."
Agada said, "Investors should buy more stocks in the breweries sector because drinks will continue to sell whether in festive or depressed seasons."
While the Food/Beverages sector may lose one of its blue chip stocks, Nigerian Bottling Company, bottlers of Coca Cola drinks, following the company's plan to delist, the Breweries sector may get more patronage following the recent acquisition of some breweries by Heineken, the majority shareholder in Nigerian Breweries.
President, Africa & Middle East of Heineken, Tom de Man, said the company's interest in the nation's beer industry is because "Nigeria is one of the world's most exciting beer markets and one of the most important countries for Heineken."
A recent report by Renaissance Capital, an investment bank, said, "Nigeria is the second largest beer market in Africa with an estimated production capacity of 17 million hectolitres (hl) in 2009, representing 15 per cent of the African market's estimated total beer production capacity of 92 million hl."
"In our view, Nigeria is a good first point of call with its strong demographics: a population of 156 million and estimated gross domestic product (GDP) per capital growth of 8.6 per cent," the report said. It further noted that Nigeria remains one of the least penetrated beer markets in the world, particularly in terms of its strong demographics.
"Because of this, we believe that growth in beer consumption will be driven by rising per capita income and GDP; an increase in per capita beer consumption; Nigeria's young population and its steady population growth, and a gradual change in cultural factors, as a bar culture arises among the younger population," it said.
The report said that this "aggressive move" by Heineken should be "a cause for concern for other players in the Nigerian market, like Diageo (through Guinness Nigeria) and SAB Miller," adding that follow-up reactions to this development is expected by other competitors.
The enormous growth potential in the Nigerian beer market, hinged on volume drivers which are still at work, has been fingered as responsible for the current scramble for the Nigerian beer market by some of the world's brewing giants.
With a 15 million hectoliter (mhl) market size (2009 estimate), which makes it the second largest in sub-Saharan Africa, the Nigerian brewery market will grow to 23 mhl by 2015.
This is premised on the combined impact of beer per capita consumption (PCC) growth - 13 litres expected vs. 10 litres currently -, population build-up of 2.8 per cent per annum, and nominal per capita income growth of 8.3 per cent per annum. This is according to a Vetiva Research which findings were released recently.
Head of Sales and Marketing of Champion Breweries Plc, Gopi Mundkur, one of the acquired breweries by Heineken, while expressing his optimism over the acquisition by Heineken International, had noted that the acquisition would offer significant growth opportunities that would enable the company take full advantage of the fast-growing Nigerian beer and malt industry.
Mundkur, in Uyo, Akwa Ibom State, had said the acquisition of the controlling interests would also further develop the brand portfolio by combining its technical and commercial expertise with that of the company.
"Heineken will bring its worldwide experience in brewing and selling brands, to continue to own brew and support the existing Sona brand," the statement had read.
Aside Heineken, other global brewery bigwigs - SAB Miller, Diego, Carlsberg and Castel - have taken the market share war into sub-Saharan Africa. These interests continue to re-affirm the growth opportunities embedded in the sector which, interestingly have generated a positive development for the sector in terms of volume growth and deeper market penetration.
SABMiller, South Africa's world brewing giant, only recently bought Pabod Breweries, Port Harcourt and Standard Breweries in Ibadan to strengthen its entry into the Nigerian brewery market and, in the process, had joggled the market.
This, expectedly, caused the Nigerian Breweries Plc and Guinness Nigeria Plc to embark on expansion.
For the past five years, SAB Miller, rated as the world's number two brewer, had been trying to open shop in Nigeria.
In its quest to tap into a $3 billion (N44.9 billion) informal market, the giant brewer is spurring farmers to raise cassava and barley for its new discount beers; that is, local beers.
As it were, the slant then was that beer sale in developed markets, according to industry sources, was losing fizz, so SABMiller was looking to the relatively untapped African market to help drive future growth. But with an estimated 315 million Africans living on less than $1 (N149.80) a day - roughly the same cost as a bottle of beer - commercial brews such as SABMiller's Peroni and Miller Genuine Draft were beyond the reach of vast swathes of the population.
Consumption of brewed products is intrinsically linked to GDP growth which is rising across SSA economies, with Nigeria expected to deliver above-average growth performance, based on IMF and World Bank forecasts. The market has delivered growth rates above this level over the past five years.
According to Vetiva "the investment case for the Nigerian brewery sector is uncomplicated. The sector is largely dominated by two global players - Heineken and Diageo, through their subsidiaries (Nigerian Breweries Plc and Guinness Nigeria Plc respectively); beer consumption is notably at low levels with per capita consumption (PCC) of 10 litres, which is a 56 per cent discount to comparative benchmarks and 40 per cent discount to levels attained in the 1980s; medium to long-term economic outlook is healthy at five per cent - plus real GDP growth expectation over the next decade; supportive demographics characterised by growing youthful population with avid thirst for fun, and a social culture that encourages festivities.
These fundamentals form the basis of our conviction for a deserving long-term call on the sector."
In the estimation of Vetiva, Nigerian brewers are moderately shielded against Nigerian macroeconomic risks as sales recover quite swiftly from unfavourable economic cycles, proven once again in the 2009/10 financial years.
"We believe the sector provides a solid route to accumulate direct exposure to Nigeria's medium-term growth potential, and indeed SSA, as we think domestic beer consumption rate will increasingly set the Nigerian market apart on the heels of expanding economy. We will play this growth theme through NB Plc and Guinness Plc from a long-term perspective, given their operational scale, market dominance and impressive CAPEX."
It states that from a valuation standpoint, the shares of quoted brewers offer a long-term attractive proposition. "But on a 12-month horizon, we find the risk-reward profile limited as the shares have performed strongly (41 per cent in 12 months) and trade at forward price earnings ratio (P/E) multiple of 17.1 and earning value (EV)/2010 estimate earnings before interest, depreciation and amortisation (EBITDA) of 9.8.
Holding on further, Vetiva noted, "We are on the sidelines to make an inroad into the sector's long-term growth prospect on better market valuations or pricing. At this point, we think direct acquisition and repositioning of fringe players, is a potent source of alpha."
31 Янв. 2011