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3-2019

Russia: Positions of Brewing Companies

The 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 brands

In 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 2019

During 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.

Hop market remains in need of recovery

A necessary downsizing process that has already begun in hop production: In 2010, worldwide acreage totalled 52,000 hectares of hops – a drop of over eight percent when compared to the previous year, the Bath-Haas Group said in its Barth-Report Hops 2010/2011 released on Monday. 35% of acreage is in Germany and 24% in the USA.

The hop crop in 2010 only totalled around 100,000 tons – a decrease of more than 12%. Germany produced 34% of the world hop crop, while the USA produced almost 30%.

Alpha production was also down by more than 13%, bringing it to 9,475 tons. Germany contributes a share of 36% to world alpha production, the USA 38%. Although the 3,400-ton surplus in alpha acids recorded for the 2009 crop year was almost halved in 2010, a production surplus of 1,800 tons still remained. Oversupply in the high-alpha hop segment remains the biggest challenge facing the hop industry.

Germany and the USA – world leaders in the hop market

These figures also make it clear that the USA and Germany are the world’s leading hop-producing nations in every respect, the Bath-Haas Group said. Almost two thirds of hops and around three quarters of alpha acids produced come from these two countries. What’s more, in Germany and the USA, growers achieve greater yields per hectare. In these two countries, a higher proportion of the crop is sold through forward contracts in comparison to the other hop-growing regions. These forward contracts provide producers, merchants and brewers with planning security.

Hop industry reacts flexibly to market changes

While crop years 2004 to 2008 were defined by a deficit in hop alpha acids, we have recorded a significant surplus in the last three years. Just to remind you: following years of oversupply, acreage was reduced so drastically in 2006 that crop volume no longer met demand in the brewing industry. As a result, the brewing industry concluded increasing numbers of forward contracts. The result was a rapid and extensive increase in acreage in order to secure supply of the necessary volume. The “old-fashioned” forward contract, which had not been used for years, experienced a renaissance with prices at a high level. This development primarily took place in the USA and Germany. Once the structural hop supply deficit was reversed in record time, the focus was on reducing hop acreage again to regulate the market. This is very difficult, as most hops are sold by growers many years in advance through contracts. Hop marketing companies in particular have to play their part here. Huge efforts involving restructuring forward contracts have made it possible to adjust hop supply to meet demand to some extent. As a result, storage facilities are overflowing and the liquidity of the company is under considerable strain.

Different market development within the variety groups despite generalised oversupply

Looking at the open market in terms of the individual variety groups, we can identify different developments. For one, the open market for high-alpha varieties is almost non-existent. When hops were sold, their prices were generally lower than the cost of production. A large amount of unsold stock remained in storage, particularly in eastern Europe and China. Aroma varieties, mainly from the USA and Germany, were placed on the open market, although prices tended to be average or low.

“Flavor Hops” represent a welcome development. This new hop variety fits into neither the classic alpha hop grouping, nor the aroma hops group. This new category consists of hop varieties with strong flavours, which produce beers that have unusually distinctive tastes. It is primarily in demand from the American craft brewer scene, as well as small breweries in other countries. In our opinion, this interesting market niche holds a lot of potential.

Clearing continues – but supply still seems secure

The efforts of the hop industry to strike a balance between supply and demand are having an effect. Around 49,000 ha are available for hop growing in 2011. That is 3,000 ha less than in 2010. This means that acreage is less than in 2006, when a low of a little less than 49,500 ha was achieved. A crop with average yields is still enough to cover demand for alpha acids. This is possible because of the vigorous planting of hop varieties with high yields and mainly high alpha acid values in past years.

However, no-one knows what the weather will be like until the crop is harvested. Furthermore, the possibility of poor harvests caused by damaged or diseased crops cannot be ruled out. In other words, hops are a natural product – so there is always a risk.

Barth-Haas Group

27 Июл. 2011

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