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. ...
Grupo Modelo’s quarterly volume grows by 8.8%
“This is the result of the recovery in the consumption of our brands, the change in calendar for the Holy Week holiday, as this year the benefits were reflected during the second quarter instead of the first quarter, as happened last year, as well as favorable weather throughout the period”, the company said.
The export volume totaled 4.9 million hectoliters, an increase of 10.6% compared to the same period of the previous year. This growth is the result of a higher demand for Grupo Modelo’s products, the improved inventory levels of its wholesalers, as well as a low comparison base. During the second quarter Grupo Modelo had double- digit growth in almost every region. It is important to mention that in the US it had the beginning of its best selling season, and Crown Imports’ results continued to outperform the import category due to the strong performance of the company’s brands at the final consumer level. Exports represented 31.0% of the total volume compared with the 30.5% registered in 2010.
Therefore, the total volume sold was 15.7 million hectoliters, 8.8% above the same quarter of last year.
Net sales rose 8.2%, totaling 25,118 million pesos. Domestic sales showed a 13.1% increase, driven by the solid volume growth, and the 4.7% increase in the price per hectoliter, which reflects the price adjustment implemented at the end of February. Export sales increased 3.9% as the double-digit growth in volume more than offset the peso appreciation versus the dollar, which translated into a 6.1% decrease in the peso price per hectoliter. However, the price in dollars increased 0.2%. Net export revenue in dollars reached 835 million, a 10.8% increase compared to 2010.
During the second quarter, Crown Imports, LLC, registered net sales of 717 million dollars and an operating profit of 118 million dollars.
Cost of goods sold grew 10.8% as a consequence of the volume growth and a larger ratio of non- returnable presentations in the mix, due to the better performance of exports compared to the domestic volume. During the quarter the total cost per hectoliter grew 1.8%. Gross profit totaled 13,544 million pesos, a 6.1% growth compared to 2010. Gross margin stood at 53.9% compared to the 55.0% registered last year.
Operating expenses rose 6.3%, due to higher marketing, distribution, and technology expenses associated to different projects being developed in the organization. However, the increase was less than net sales. It is worth mentioning that the comparison base includes the extraordinary cost associated with the Compa??a Cervecera del Tr?pico strike in 2010. Total SG&A expenses per hectoliter decreased 2.3%. Operating profit totaled 6,806 million pesos, a 5.9% growth. The operating margin reached 27.1% compared to the 27.7% registered during 2010.
EBITDA (Operating income + Depreciation – Equity income of Associates) totaled 7,787 million pesos, a 9.1% increase compared to 2010. The EBITDA margin expanded 20 basis points to 31.0%.
The Comprehensive Financing Result showed a gain of 153 million pesos, a decrease of 51.5% versus 2010. This figure is mainly the result of the exchange rate loss due to the appreciation of the peso against the dollar in the period.
Other income and expenses registered an expenditure of 431 million pesos, of which most is related to profit sharing.
During the quarter taxes totaled 2,028 million pesos and the effective tax rate was 31.1%.
The net majority income was 2,888 million pesos, a 1.5% decrease against last year, because of the exchange rate loss and tax increase. Thus, the net margin stood at 11.5%.
FIRST SEMESTER 2011 RESULTS
Total volume grew 10.3%
Net sales increased 8.8%
EBITDA rose 11.4% and the margin expanded 70 basis points
During the first semester of 2011, total beer volume increased to 28.0 million hectoliters, a 10.3% growth compared to the same period of last year.
The domestic volume, including the imported brand portfolio grew 9.6%, totaling 19.5 million hectoliters, as the result of the solid demand for Grupo Modelo’s products, a low comparison base and favorable weather conditions. The export volume rose 12.2% to 8.4 million hectoliters, showing a strong demand for the company’s products, the improved inventory levels of its wholesalers, particularly in the US, and a low comparison base. It is important to mention that because of the strike at Compa?ia Cervecera del Tr?pico during the second quarter of 2010, the inventory levels in the distribution channel in the US decreased. Nevertheless, inventory levels were recovered during the third quarter of 2010. Exports represented 30.1% of the total volume compared to 29.6% in 2010.
Net sales rose to 44,369 million pesos, a growth of 8.8% in comparison to the same period of the prior year. The 12.4% growth in domestic sales came from higher volume and the 2.6% price increase. At the end of February, Grupo Modelo implemented a price increase in Mexico based on its revenue management system, aiming to maximize opportunities based on brands, presentation and territories.
Export revenues grew 6.1%, fueled by the double-digit volume growth, since the price per hectoliter in pesos decreased 5.5% due to the strength of the peso. Nevertheless, the price in dollars increased 0.5% during the period. Net exports revenue totaled 1,441 million dollars.
During the first semester of 2011, Crown Imports, LLC, registered net sales of 1,249 million dollars and an operating profit of 236 million dollars.
The cost of goods sold rose 8.6% mainly due to a higher share of exports in the total volume, which means that there were higher sales of non-returnable presentations. Gross profit totaled 24,141 million pesos, a 9.0% growth in comparison to the first semester of the previous year. Gross margin stood at 54.4%, which represented an expansion of 10 basis points in the period.
Operating expenses increased 8.8% due to higher marketing, distribution and technology expenses. Operating profit totaled 11,708 million pesos, a 9.2% increase. Consequently, the operating margin was 26.4%, marginally ahead of the 26.3% registered in 2010.
EBITDA (Operating income + Depreciation – Equity Income of Associates) totaled 13,654 million pesos, 11.4% higher than the one registered in 2010. This figure reflects a 20.3% increase in depreciation and amortization. The EBITDA margin stood at 30.8%, representing a 70 basis points growth compared with the previous year.
The Comprehensive Financing Result showed a gain of 154 million pesos, a 52.3% increase versus the previous year.
Other income and expenses registered an expenditure of 926 million pesos, a figure 22.8% higher than the previous year, due to an increase in the provision of employees’ profit sharing and the fixed asset write-offs.
The taxes line registered 3,073 million pesos, and the effective tax for the semester was 28.1%. The net majority income was 5,046 million pesos, a 0.5% growth. Net margin stood at 11.4%, compared to the 12.3% in 2010.
19 Июл. 2011