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. ...
Ukraine. The Beer Market Analysis
Consumption polarization is the main trend of the market – the economy and premium segments grow due to the sales of mass beer sorts. Carlsberg Group and SABMiller seized the opportunity given by this trend and increased their market share yet the mainstream leaders companies AB InBev and “Obolon” saw some market share decline. The retail beer price becomes still more important as brewing companies got involved into price competition. They keep the prices for economy brands down, propose bonus packages and inexpensive license brands. But in spite of the actions of international companies, the market shares of small producers and import continue to grow.
The production of beer in Ukraine has grown by 3.3% to 31 mln. hl over 2010 according to the data of Sate committee of statistics. As early as in June of 2010 the dynamics of beer production recovered from the negative trend and remained positive till the year end (with the exception of October). The production growth rates were slowed by 1.4% due to volume reduction of beer exports.
According to our rough estimation the volume of beer production by value amounted to 11 bln. hrn. or about $1.4 bln. We should mention that the proceeds from beer sales of Ukrainian producers are about 5 times bigger than these of their Russian ones who turned out 3.3 times more products.
The export has fallen by 12.1% to 3 mln. hl over 2010. About 10% of the national production volume is sold abroad. And 2.3 mln. hl from this amount was exported by “Obolon” according to the company itself.
The export has been decreasing since 2009, when the volumes of supplies to Belarus and Moldova were cut. 2010 saw a fall due to reduction of exports to Russia. In the first place the reduction was caused by distributors’ forming excess stocking in 2009, expecting excise rates growth. Besides, low-mainstream segment of Russian market, which is mostly dominated by Ukrainian beer, saw stronger competition with the local producers.
On the contrary the beer import to Ukraine has grown rapidly over 2010 having increased by 63% to 0.24 mln hl. Besides there were two main trends of growth – the Russian import went up by 66% and the import from distant foreign countries grew by 59%. The growth of imports from Russia has been conditioned by stronger performance of SABMiller and Efes.
The import share of the Ukrainian market grew from 0.5% to 0.8%. By value it reached 1.3% of the market, as the price for foreign beer is on average by 60% higher than for Ukrainian beer.
Thus, basing on the data of the trade balance (production + import - export) one can estimate that the Ukrainian beer market in 2010 grew by 5.5% to 28.3 mln. hl. By our assessment by value the market grew by 18% to 22.4 bln. hrn. in 2010. The beer consumption growth was driven mostly by the general demand recovery of FMCG market, and the hot summer.
In dollars the beer market saw a growth by 12% to $2.6* bln. due to some hrivna reinforcement at the end of 2009 and its subsequent stabilization.
* The interbank currency rate and not the official one was used as the basis for the calculations.
Thus the Ukrainian beer market by volume is 3.5 times less than the Russian one and it is 7.6 times less in dollars
Prices and price segments
The average prices for beer fluctuated over 2010. By December, they grew by …% as compared to January, but it was actually reduction as the price index reached …% as early as in autumn. The inflation for food products amounted …% by the end of the year. The discrepancy in the growth rates between the inflation and retail prices for beer resulted from keener price competition and widening of economy segment of the beer market.
If we compare the prices on the Russian and Ukrainian markets in the US dollars, we can notice that the price for beer on the Russian market is twice higher. Such a big difference can be explained by two factors – different beer affordability and higher tax component in the retail price of Russian beer. Thus, the affordability index for Ukrainian beer is …% and …% for Russian beer.
These indices were calculated as the share of price for one beer liter in the average monthly income rate per head. Though the difference in the indices doesn’t seem very significant, one should consider stronger efforts to economize of Ukrainian consumers. The food products, housing and communal services, transport and communication (basic goods) take up about …% of all spending of an average Ukrainian. In Russia this share is about …%.
Thus, taking into consideration that beer is a non-essential product, the affordability index should be calculated as the share of price for beer in the means left after essential spending. With this method the index will amount to …% for an average Ukrainian and …% for a Russian consumer. On the background of such a big difference of beer affordability, it seems surprising that its consumption per head in Russia and Ukraine differs not very significantly – … and … liters per person respectively in 2010.
As a small digression from the beer topic we should pay attention to the possibility of reduction of consumers’ income due to new growth stage of gas prices for population. If the rates grow, than the brewing companies will have to comfort themselves with the fact that the heating season starts after the beer season, thus this factor will not have strong influence on the market segmentation and the final indicators of 2011.
The structure of the average retail beer price by the end of 2010 was such that half of the price for a liter of beer went to the proceeds of Ukrainian producers, which was about … hrn. or $... The distributors and retail got approximately the fifth part of beer price which is … hrn. or $...
If we compare the structure of beer price on the Russian and Ukrainian markets, we can notice a much bigger share of the excise and trading partners in Russia. Thus, the share of Russian producers’ proceeds is considerably lower. However, in the absolute indices, the gain from one sold beer liter of Russian producers is … times higher.
2010 saw developing process of market polarization by price segments. There was continuous growth of economy beer segment. On the one hand the segment itself developed considerably, there appeared major popular brands. On the other hand, this process was stimulated by standard of well-being lowering of many Ukrainian beer drinkers.
The income growth in 2010 was minor and much slower than the inflation for many essential goods. However, the consumers were not willing to spend more, that is why in general by FMCG market there was higher demand for cheaper products even if their quality was lower than of medium price analogues. That is why the growth of volumes of realization in value was much smaller than the price rise.
This process was reflected on the beer market too. The producers tried to retain the volumes of proceeds in the first place due to the medium price segment, probably hoping that consumers would remain loyal to the well-known brands. But at the end the practicalness of consumers prevailed and some of them turned to less expensive sorts. At least there has been an obvious correlation between the periods of price rise for major mainstream brands and market share growth of less expensive beer. Thus, higher revenue led to worsening of the sales structure.
While in January 2010 the market share of mainstream segment amounted to …% by volume, by the end of the year it shrank to …%. At the same time the economy segment grew from …% to …%.
Reallocation of shares in money terms was even more obvious. The mainstream segment reduced from …% to …% during the period from January to December while the economy segment grew from …% to …%.
It is possible that the mainstream share reduction could have been avoided if not for high plasticity of demand in the economy segment which prevented proportional price rise for mainstream and cheaper beer sorts. Though the average beer price in the economy segment is “the average temperature at the hospital”, basing on the dynamics of several brands, we still can say that the leading companies got involved into price competition and are now trying to attract consumers by low price. At that the economy brands are heavily promoted and their high quality is permanently pointed out. Besides the main economy brands have already obtained some image attributes of mainstream sorts.
Thus, there are preconditions for further blurring of the lower line of the mainstream segment both due to successful economy brands diffusion and to stronger consumers’ practicality in the unpredictable social and economic situation.
The second key reason of the mainstream segment reduction is sales growth of a raw of premium beer sorts. At that the situation to a certain degree resembles the one described above. There is a significant number of license brands at good price. A demanding consumer can pay a little more and buy beer with an image of an expensive product with both high quality and suggested cultural attributes. Some premium brands in spite of their category have practically become mass products or are likely to do so.
The mainstream segment is exclusively important for two brewing giants – “Obolon” and AB InBev. It is these two players that are immediately affected by share reduction of mass brands. They certainly have to react and now strive to keep the sales up by all means.
The medium price segment in spite of its stagnation saw a growth of sales of some brewing companies. For example the brands of company “Persha pryvatna brovarnia” showed a good growth. However except for the western region, these brands are not rated as mass ones though their price belongs to the range from 7 to 10 hrn.
Thus, one can say that consumers’ requirements to the beer taste and quality grow and the image and brand positioning have to be even more explicit. However Ukrainian beer drinkers like to taste new beer sorts. They react to proposal to economize or to buy the brand which is positioned as a product of a more expensive class than its competitors but at the same or a little higher price.
While giving our estimations on the segments shares we should note that according to price classification we refer to a beer sort as mainstream if its price is 7-10 hrn. for a liter. However major economy and premium brands which showed fast growth in 2010 have come close to both of these price borders.
For example beer “Lvovskoye” which we formally attribute to economy segment can also be referred to as the lower border of the mainstream, beer “Zolotaya bochka” balances on the edge of mainstream and premium segments. Thus, any reconsideration of rather conventional and blurry segment borders will lead to significant change of their shares.
The market segmentation by package saw changes before the high season and at the end of the high season. At the beginning of 2010 the market share of PET increased slightly, mostly due to proposition of bonus packages (1.2-1.25 liters) in the mainstream segment. But as early as in May the glass bottle and can restored their positions. At that the market share of glass bottle grew considerably mostly due to the growth of brands … and … in spite of popularity fall of … and … in the correspondent package. The year saw a gradual decline of 0.33 l glass bottle share. The decline took place for the most part because of decrease of brands … and … in small volume package. We should also mention a considerable popularity growth of 2-liters PET starting from autumn 2010 due to sales increase of … and … by ...
The positions of the leading producers have somewhat changed over 2010. The changes resulted from the development of the existing changes. In particular, there was a reduction of shares of AB InBev and “Obolon” at the background of market weight growth of Carlsberg, SABMiller, “PPB” some small producers and beer importers. One can see this dynamics when analyzing market shares both by volume and value, but if one assesses the market in money then the change of producers’ market share will be not so significant.
We should also note that the main changes of market shares of the three leading companies took place just before the sales season, which means that … sales growth surpassed the market and … and … underwent stagnation or sales reduction. At the same time the market share growth of smaller players took place after the season end which means that the growth of their absolute indices in 2010 surpassed the market but was not very big. However … and … producers increased their sales rate significantly in comparison with 2009 as the previous market share growth also took place in low season.
According to company AB InBev reports, in 2009 and 2010 the volumes of sales on the Ukrainian market were … and … mln. hl. The stagnation at the background of market growth led to company’s market share reduction. Basing on the above given trade balance data, we can estimate that the company’s market share declined from …% in 2009 to …% in 2010. These figures are very close to the data of monitoring companies.
Company AB InBev saw its market share decline also due to the sales structure change. It seems that the company was led by … and decided to … in order to retain the …. indices.
As to the allocation of beer sales by price segments AB InBev yielded its position in … directions. There has been reduction of market shares of … and … price brands for a long time. However the company saw a significant decrease of its market share … in 2010 and its immediate competitor, … won some of AB InBev positions.
In particular, in … segment the company’s share was decreasing during the year, but at the background of inexpensive beer popularity growth, even such reduction meant minor growth. In particular, the market share of beer … went up, which means an outrunning growth of the brand sales. At the same time there was a further market share reduction of beer … which, however, doesn’t make a big contribution to the company’s sales structure. Thus we can speak of some growth of the economy component of company’s portfolio. In the high season the average retail price for beer … decreased appreciably, which could be due to … issue, as a reaction to the competitors’ actions.
Brand “Rogan” was the first to launch a promotional package in the economy segment. On the one hand this step was rather unexpected as the package of 1.2 liters appeared not in the period of expected consumers’ demand falling but on the contrary – in spring before the high season. On the other hand, it was probably necessary due to the brand market share reduction which begins to take shape.
However company “Obolon” immediately reacted to the competitor’s actions by launching promotional package for brand Zibert with even bigger volume – 1.25 l. Thus the dangerous closeness in prices if compared considering the volumes of “Rogan” and Zibert was obviated and the economy brand by “Obolon” retained its status as the cheapest mass brand.
The third largest player of the economy segment, the Ukrainian subdivision of Carlsberg tried not to involve brand “Lvovskoye” in the package competition. Obviously the company tried to dissociate this brand from other sorts of inexpensive beer intending not to blur the image of “Lvovskoye” by promotions connected with economizing for consumers. However, in the middle of the summer the rapid growth of “Lvovskoye” in one-liter bottle stopped and then the market share of the brand started to fall. At that time Carlsberg had to react to the existing tendency and attract consumers by promopackage of 1.25 liters too.
To a certain extent the “mix” could have been improved by a significant price raise for premium brands of the AB InBev. Though in the high season the market share of the company in the premium segment started declining. The decline could level the effect of the price raise. However Staropramen, the key premium brand of the company continued growing in 2010, but it was going on at the background of the advancing growth of the premium segment itself. Here we should also note the company’s efforts to keep the retail price for Staropramen which reaches the upper margin of the mainstream segment, relatively not very high.
In the mainstream segment the company is represented by the most popular beer in Ukraine that is “Chernigovskoye”. Under our estimation, sales of this brand in 2010 stagnated or underwent a minor downturn. The reason has been described above, it is the same reason which led to the stagnation of the mainstream segment, namely the pressure from cheaper and more expensive beer sorts, produced by competitors.
From the point of view of sales geography, AB InBev yielded its share practically in all big cities, where the company brands occupy a significant market share and saw a decline of its market weight in the capital. At the same time in the cities where the market share of AB InBev is not big, the company has won some of competitors’ positions.
Carlsberg Group in the report for 2010 does not give the natural indices of the sales, though speaks about 7% growth and positive mix-effect. In general, 2010 became one more successful stage of the company work.
Under our rough estimation the market share of Carlsberg grew in 2010 by …-… p.p. having reached …% by volume. Thanks to the sales structure including more expensive than the market average, supply Carlsberg share by value amounted to …%. The growth of the company share in 2010 continued from … till …, having secured its second position in the list of the leaders.
The positive results were attained due to the market share increase in the two growing segments – economy and premium ones. At that Carlsberg easily yielded its positions in the mainstream turning its competitors from two sides and even attacked the mainstream segments itself. That was possible because the brands by Carlaberg Croup which showed the greatest growth are on the borders of the price segments. This strategy without any significant changes has benefited the company for two years because the two other leading players are not able to resist it as the mainstream comprises the core of their sales.
The share of Carlsberg in the economy segment fluctuated over 2010, but still in whole it grew. Particularly notable growth (after some reduction) could be observed starting from the … till … 2010. The positive dynamics of the market share and sales resulted from the adequate response to the competitors’ actions. In particular, the company share in the segment went up for two reasons.
The first one was described above and connected to the company’s wish to restore the sales of brand “Lvovskoye” in … volume due to the issue of the bonus package of … liters.
The second one was launching a new interesting subbrand – beer “Lvovskoye Zhivoye”. From the middle till the end of 2010 the brand won …% of the market. It is notable that the brand campaign on TV started only in September. Both brand “Lvovskoye” itself and this subbrand, can to our mind be considered as an attack on brand “Obolon”, because their images and positioning are very similar. We should mention that “Lvovskoye” belongs to the economy segment rather conventionally, and “Lvovskoye Zhivoye” in glass bottle can rather be attributed to the premium segment, both from the point of view of the retail price and the package which possesses some elements of “Baltika №3”. By the end of 2010 and the beginning of 2011 the average retail price for “Lvovskoye” grew considerably and there is now the formal ground for it to be referred to as mainstream segment brand.
“Arsenal” remained the only significant economy brand of the company. In spite of its original image of the beer with male character, it saw further market share decline. This decline was obviously connected to the stronger competition from brands with growing popularity in the economy segment. On the one part it is pressed by cheaper …, from the other part – by more expensive sorts … and ...
Brand “Slavutich” in 2010 had practically no promotion. The price for its classical sorts and on the first place “Slavutich Svetloye” in glass bottle and two-liters PET package, was to our mind not much higher than competitors’ analogues but even this insignificant difference seemed ungrounded for the consumers as there was no TV promotion. In fact the sales of this brand were “eaten” by brand “Baltika” situated in the same fridges than by competitors. If this well known to Ukrainian consumer brand doesn’t find its own niche and get the adequate support, then its share will obviously continue to decline rapidly.
The share of Carlsberg group in the premium segment grew fast from … till ... By the year end the company accounts for the half of all expensive beer sales. Considering the growth of the premium segment itself, the mix-effect for Carlsberg Group could be expected to stimulate the sales profitability. Though inside the premium part of the portfolio the dynamics of brands shares was various.
Brand “Baltika” was the sale engine, having ranked the absolute leader in the premium segment. The main role in the market share increase played its reasonable price, growth of sort … sales and high promotional activity, in the first place TV ads. In fact today “Baltika” has become not only the heaviest brand in Ukrainian Carlsberg Group subdivision, but also quite a popular mass brand.
The share of Tuborg, on the contrary, shrank, in spite of marketing actions in particular constant organization and support of youth events. The market share reduction was obviously connected to the crisis age of the brand – there appeared “fresh” competitors and not necessarily targeted for young consumers, but well appreciated by them though. Thus we can speak of the increase of young consumers’ practicality as brand Tuborg has a big image component and the retail price is higher than prices of alternative sorts.
Brand Holsten, being by now the cheapest brand with foreign origin, made a considerable contribution into the development of license production. In April 2010 the company started bottling the brand into PET which made it possible to reduce the cost for a liter of beer. This brand can be referred to as premium only formally, in fact it is a mainstream sort. The taken measures made it possible for the company to increase the market share of the brand without big marketing budgets. To some extent Holsten filled up the vacant niche formed after sales fall of brand “Slavutich”. Besides Holsten simply did not have any competitors before Amsterdam Mariner by SABMiller was launched.
The company’s market share grew in most cities of Ukraine, both on the domestic markets and all five regions. Although in some cities the market weight of the company remained unchanged or shrank a little bit, this did not affect the general positive result.
Company “Obolon” saw further slow market share reduction – under our estimation in 2010 it went … down relative to 2009 to …% by volume. Accordingly, at the background of small growth of Ukrainian market, one can speak of keeping the sales at approximately the same level. However, due to bigger weight of economy brands in the general realization structure of “Obolon” ltd, the company’s market share by value fell by …-… p.p. to …%.
In fact, two key brands mainstream “Obolon” and economy Zibert the constitute the bulk of the company sales. The sales of these brands were stimulated by the price segments development, but in their turn they strongly effected the general segment dynamics.
In particular, the share of the young brand Zibert in fast growing economy segment fluctuated but in general, it grew over 2010. As early as in 2009 the brand won strong positions on the market (its launch took place in March 2009), and by the end of 2010 its sales amounted to about a … of all sales of beer cheaper than 7 hrivnas per liter. Year 2010 saw quite a powerful marketing support unprecedented for a beer with such a low retail price. As a result the brand accounted for a … of all company sales by the end of the 2010.
The other economy brand of the company – “Desant” – increased its price, and distanced oneself from growing Zibert having located between it and beer “Obolon”. The market share of “Desant” is slowly decreasing which probably means stagnation at the background of economy segment growth.
One should also note quite a successful development of the economy sort which appeared in “Obolon” range not long ago, i.e. “Zhigulyovskoye”. It took the people’s brand by Kiev producer only the short time from July to December 2010 to won about …% of the market. Approximately equal shares in the general volume of “Zhigulyovskoye” realization are composed by the three types of packages: …, …. and ...
The fast growth of “Zhigulyovskoye” sales practically without promotion when the stake is made on the distribution and price, resembles the successful start of Zibert. However to our mind the presence of three popular economy brands in one mix limits the general potential for their development. If their sales and share in the general volume continue growing, one will be able to say that “Obolon” heads for economy segment domination.
The margin and sales profitability are supported by the key brand “Obolon”. Its share to our mind amounts to about …% of sales by volume and value. Thus, among significant Ukrainian producers “Obolon” ltd is the most dependent on the sales dynamics of the brand of the same name.
In 2010 particularly in the high season, there was quite a rapid growth of average retail price of “Obolon”. At that the rates of this growth were the same as these of … price. However after the high season the competitor’s price slumped. “Obolon” obviously due to growing raw materials cost did not got involved into price competition, but on the contrary, started increasing the price rapidly. It was probably necessary to ground the brand’s higher retail price, so in 2011 the company took an original marketing step, having taking the third of the shelf-life of the beer by three times, and launched the correspondent campaign – beer “Obolon” is now fresher than competitors’ products.
As for the geography of sales, there was “Obolon” market share reduction by …-… p.p. practically in all regions of Ukraine except for some … regions, over 2010, which resulted in the general negative dynamics.
The year was on the whole successful for Ukrainian subdivision of SABMiller. The company slowly but steadily increased its market share starting from June 2010. By our estimation it grew by about … p.p. to …% by volume as compared to 2009. By value, due to the correspondent sale structure, the growth was higher and averaged … p.p to …%.
The company works in the two most attractive for today segments namely economy and premium and this alone was a precondition for the growth of sales and the market share. Furthermore, inside these segments the price positioning of SABMiller brands is also optimal, taking into account the present tendencies.
In particular, the average price of brand “Sarmat” lies on the border of economy and mainstream segments, where for example it competes with quite a successful brand ... Today beer “Sarmat” accounts for more than a … of the company’s sales, though there is a tendency of gradual reduction of its weight in the brand portfolio. In perspective the distribution of “Sarmat” is planned to be limited to the eastern regions of the country.
The economy part of the portfolio also includes “Zhigulyovskoye” which has the same price as “Sarmat” in many regions. This price closeness to our mind means that the geography of brands distribution will be different and “Zhigulyovskoye” can be supplied to all regions of Ukraine. We should note that this brand appeared on the market and started growing dynamically much earlier than the analogue sort by “Obolon”, but Kiev “Zhigulyovskoye” surpassed “Zhigulyovskoye” from Donetsk thanks to the developed distribution. However now, due to small market share any serious competition between these two products is not likely to appear.
License brand “Zolotaya Bochka” approaches the top of mainstream segment of the beer market. Over 2010 the sales of all inexpensive license brands increased equally fast and one can speak of growing competition in the segment of Russian beer as “Baltika” practically stopped being the monopolist there. Although the Russian origin of “Zolotaya Bochka” is not so obvious to Ukrainian consumers, in fact the brand is a direct competitor of “Baltika”. Furthermore, the dynacmics of average retail prices for beer “Zolotaya Bochka” is surprisingly similar to the dynamics of “Baltika” though in general in Ukraine it is much cheaper.
If not for launching of beer Holsten in PET, one could say that “Zolotaya Bochka” was the cheapest license brand of 2010. However not a long time ago SABMiller made a knight’s move having penetrated the territory of “Chernigovskoye” and “Obolon” with new license brand Amsterdam Mariner. Having the adequate level of distribution and national TV promotion this brand is most likely to succeed. Besides, to our mind Amsterdam Mariner is potentially a very serious competitor for beer Tuborg and can even win its market share over because in our opinion the both brands are targeted at the same young audience at that Amsterdam Mariner is considerably less expensive.
The third brand of SABMiller, beer Velkpopovicky Kozel to some degree follows the lead of Staropramen and is similar to it in all senses. However the average market price for Czech brand by SABMiller is still higher. On the one hand the company cannot make it a mass brand, as AB InBev strives to do. On the other hand, even in the niche of Czech license beer there is a dependence of sales on the affordability. Before the high season Velkopopovicky Kozel started growing cheaper, and by its ending the prices differed not very considerably. The sales of the brand grew, though its growth did not exceed the dynamics of the … development as it was in 2009.
As we can see the company still has a big potential for development, which lies in the license component of the brands mix and further national distribution (see article “New Horizons of “Miller Brands Ukraine”).
The regional picture of beer consumption
The following description of peculiarities of beer consumption in five regions and the capital of Ukraine was made basing on the public opinion poll 2010 GFK Ukraine in August 2010 as well as on the data of distributors and independent monitoring companies over the second half of 2010. As it turned out people in different parts of the country take and drink beer differently.
This region has the highest percentage of adult beer drinkers (63.5%) in Ukraine. The consumers in this region don’t like drinking beer at their friends’ places (1%). This might be the reason why the 2-liter PET package is not very popular. Instead in the northern part of the country the popularity of 1-litre PET package is comparatively high and the share of economy beer sorts is big. License and imported brands are not very popular, people prefer local beer.
Here more often than in other regions beer is used as a remedy against hangover (35.7%). Besides people here tend to consume beer with other alcohol drinks (30.1%).
People in Western Ukraine are in the first place different from other beer consumers as they tend to consume beer in HoReCa places (29%). Besides these consumers enjoy drinking beer outdoors (9%). Furthermore beer is comparatively seldom drunk at home (45%) and practically not drunk at friends’ places (3%). Thus, large volume PET packages are not very popular and the share of glass bottle is the biggest.
Ukrainians in the west of the country most often start drinking beer for the first time according to their own choice (51.4%). Less people drink beer to enjoy its taste. Besides in Western Ukraine consumers pay much attention to unusual beer sorts.
Consumers in the center of Ukraine drink beer at home much more often than in other regions (69%), but don’t like to drink beer in the streets (4%), at their friends’ places (3%) and outdoors (1%).
In the central regions of the country PET package of any volume is popular, and beer in medium and small package is bought comparatively rare. The share of middle price segment does not differ much from the country’s average, but the share of the economy segment is much higher at the expense the premium beer.
Here as a rule people start drinking beer at comparatively older age. Besides, consumers in this region start drinking beer at their own choice more often (50.7%) and consider that advertisement doesn’t influence their choice.
In the central region of Ukraine there is the highest percentage of people (84.3%), who have never used beer to fight hangover.
The smallest number of beer consumers lives here (53.8%), though they start drinking beer at a very young age.
In the south more often than in other regions, beer is drunk at other people’s places (21%) in HoReCa establishments (21%) and outdoors (7%), instead they drink beer at home comparatively rare (46%).
Like in the central region, the share of economy market segment is higher than the medium one, at the expense of premium segment reduction.
The population of the southern regions start consuming beer under the influence of friends or society but don’t consider themselves to be affected by advertisement. Most consumers in the southern regions do not agree that beer can replace strong spirits.
Comparatively many people (40%) drink much beer at one time (1-2 liters), while comparatively few people (9.4%) drink 0.33 liter. Two-liter PET package is bought very often, but one-liter PET is comparatively not popular. Beer consumers in the east of Ukraine have the most conservative preferences as to the taste characteristics of the drink.
People in the eastern regions enjoy drinking beer at their friends’ places (11%). As a rule they start consuming beer under the influence of friends or society. Most people in the east think that beer can substitute for strong spirits.
The consumption differs diametrically depending on the package volumes. In Kiev most people (28.4%) drink beer in small volumes (0.33 l) and rather many people (8.2%) daily consume 2-3 liters of this drink. Comparatively few people consider 0.5 liter to be their normal dose, and many people think that large volumes of beer are not harmful for the health.
In spite of the high rate of income, Kievans drink beer outdoors more often (37%) than in other regions and they consume it less often in HoReCa places (5%) which is obviously connected to the prices of restaurants in Kiev.
Big PET packages are not very popular in Kiev, but the share of can is rather high.
In Kiev less people drink beer to enjoy the taste but more people consume it in order to have good time with their friends (37.5%). However the consumers in Kiev are relatively willing to taste unusual flavors and new products, besides the popularity of license brands is also rather high here. Accordingly, the share of premium beer sorts in the structure of consumption is the biggest.
Not many capital residents tend to drink beer with other alcohol (6.6%) though Kievans consume beer against hangover more often (33.4%).
You can find detailed results of public opinion poll in article “Research on beer consumption in Ukraine” of the journal “Beer Business” № 4-2010.
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3 Июн. 2011