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.
In Beer Deals, the Pause That Refreshes
SABMiller’s $10.5 billion takeover offer in June sent Foster’s Group Ltd. shares surging, as eager investors in the Australian brewer waited for a higher offer or a white knight. Neither has materialized. Foster’s shares, which reached 5.23 Australian dollars (US$5.78 at current rates) on June 22, have fallen back to A$5.05, hitting a post-offer low of A$4.98 on Friday and edging back to the A$4.90 a share bid price.
Industry observers now say that a big new bid is unlikely. Other suitors are too small or too busy on other projects, they say. Meanwhile, Foster’s has vigorously defended its independence, while SABMiller may have good reason to wait before springing its next move.
Some analysts also say Foster’s presents a challenge for potential suitors, as any effort to turn around years of slow growth in its home market could eat into its profit margins.
“We believe there will be no competing bids based on our assessment of global brewer balance sheets,” said Credit Suisse analysts in a research note.
Foster’s continues to insist the SABMiller bid is too low. On Friday, Chief Executive John Pollaers said there had been no engagement with SABMiller since the approach was made. SABMiller has said it will continue to seek talks with Foster’s.
Australian brewer Foster’s is trying to fend off a takeover attempt. The number of potential bidders in the brewing world isn’t big. Credit Suisse says that among the few that could fund a deal are Grupo Modelo of Mexico and the world’s biggest brewer by volume, Anheuser-Busch InBev.
But they are unlikely to bid due to competitive issues, an interest in other targets or a focus on bulking up in emerging markets.
In Japan, Asahi Group Holdings Ltd. has growth ambitions and an existing tie-up with Foster’s to market Asahi’s flagship beer in Australia. But its market capitalization is roughly equal to Foster’s, and a Tokyo-based banker says most Japanese lenders would not be willing to fund such a large acquisition. Also, Japanese accounting rules mean that Asahi would have to amortize a large amount of goodwill swiftly, making the deal less attractive.
Asahi is already seeking a stake or a controlling position in smaller New Zealand-headquartered Independent Liquor Ltd. instead. It has already submitted a competing bid against Japanese rival Suntory Holdings Ltd., and final bids are due Thursday, said a person familiar with the matter.
If no competitor emerges, SABMiller may wait until Foster’s full year results are unveiled on Aug. 23 before reviewing its offer so that it can get more detail on its target. “We believe SABMiller is in this fight for the long haul and is strongly motivated to make this deal happen,” said David Thomas, an analyst at broker CLSA Asia-Pacific Markets in a note.
Many analysts expect SABMiller to eventually raise its offer after Foster’s results are released, but only marginally. At about 12 times Foster’s prospective full year core earnings, SABMiller’s offer is roughly in line with past brewery deals, according to analysts. The average brewery deal has historically been struck at about 11 times core earnings, they said.
If a deal does happen, Citigroup analysts question how SABMiller will maintain the profit margin at Foster’s beer business while reinvigorating growth. The Australian beer market has been roughly flat in terms of volume for nearly a decade, but Citi cites a roughly 40% operating margin at Foster’s Carlton United Brewers due in part to less competition.
Foster’s and the No.2 brewer in the market, Lion Nathan, have raised beer prices above inflation for 15 of the last 17 years. But in recent months beer sales volumes have slipped and supermarkets have been slashing prices.
UBS analyst Naomi Takagi says Foster’s has been losing market share in recent years and to defend itself has cut wholesale prices of premium brands. A spokesman for Foster’s said its wholesale price agreements with customers are confidential.
Takagi says if SABMiller wins control of Foster’s the buyer is more likely to work on building brands by careful targeting of customers rather than heavily discounting products to achieve growth. “If SABMiller enters the market, the focus should shift from price to brand,” said Takagi.
And that means Australians may see an end cheaper beer prices if SABMiller wins Foster’s.
2 Авг. 2011