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. ...
SABMiller tries fresh approach in Sudan
An initial task was working out how to acquire a plot of land in an area with an undeveloped land ownership system, a problem that was overcome after the slaughter of a cow on the chosen property and the acquisition of a tractor for the local community, as well as royalty payments.
The brewery opened just more than 20 months ago, but it remains a challenging and expensive place to operate. Materials have to be transported to the landlocked country – the world’s newest – through the Kenyan port of Mombasa. Clearing the port can take weeks, before trucks embark on a week-long journey through Kenya and Uganda to reach Juba, South Sudan’s capital, at a cost of $15,000 to $20,000 (U.S.).
The experience may be extreme, but it highlights some of the issues facing companies looking to tap into the fast growing economies of Africa.
“It’s [South Sudan] been fascinating,” says Mark Bowman, SABMiller’s managing director Africa. “You have 8 million people and no one making beer. There are not many greenfield opportunities left in Africa, so when you see that, there’s a significant amount of risk but also a tremendous amount of opportunity.”
The poor state of infrastructure across the continent is one of the major impediments to increased investment in Africa.
Yet the potential is also clear, with sub-Saharan Africa forecast to grow at about 5.5 per cent this year, and a low average beer per capita consumption of seven to eight litres per capita annually. This compares to 60 litres for South Africa, the continent’s largest and most developed economy.
South Africa generates the equivalent of 95 per cent of the continent’s electricity and hosts about two-thirds of its rail network, but still suffers its own power and infrastructure problems, illustrating the infrastructure deficit elsewhere.
SABMiller, which has direct operations in 17 African countries, is bullish on the continent’s prospects and expects volume growth rates of eight to 10 per cent per annum. Last year, it doubled capacity at its South Sudan brewery to 350,000 hectolitres and it is sourcing sorghum from local farmers, which will help reduce costs. The brewer had planned to branch out beyond Juba, but has had to put those plans on hold because of the absence of paved roads.
Indeed, throughout the continent, the company knows it cannot rely on states to provide services such as water or electricity and instead looks to be self-reliant, supplying its own power, water and water treatment. As a result, putting in new capacity costs 30 per cent more than in developed markets, Mr. Bowman says.
The dual problems of poor roads and negligible rail networks also means the model of having one large brewery and distributing across the country is not feasible in many places.
In Tanzania, for example, SABMiller has four breweries producing 3 million hectolitres, equivalent to a small brewery in South Africa. Its newest brewery in the east African state was opened in Mbeya, a town in Tanzania’s southwestern corner, partly to save $1.5-million annually transporting beer from Dar es Salaam, the commercial capital.
The brewery cost about $70-million, but it has helped boost sales in a remote area of the nation, Mr. Bowman says. “The challenge with Africa is that it’s a billion people but it’s very fragmented, each country has its own bureaucracy [and] many of these countries are sub-scale by many standards. The most efficient thing would be to have 25 breweries across Africa and ship it around but Africa obviously doesn’t work that way,” he says.
But he believes countries are beginning to address the infrastructure constraints. “There’s absolutely no doubt that if you take it Africawide, it’s getting much better very quickly. We are seeing improvements in all aspects – governance, road infrastructure,” he says. “Areas that are perhaps underperforming still would be utilities such as power and water.”
16 Авг. 2011