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 Seen Winning Foster’s With 6% Boost
SABMiller, which yesterday took the A$9.5 billion ($10.1 billion) bid directly to investors, may have to raise the offer to A$5.20 a share, according to the median estimate of 13 analysts surveyed by Bloomberg News. That’s 6 percent more than the current terms, and 10 cents a share lower than estimated in a June survey, when SABMiller’s first approach was rejected by a Foster’s board as “significantly” undervaluing the brewer.
Since SABMiller’s original proposal, no rival bidders have emerged, global markets have sunk and rivals including Kirin Holdings Co. and Carlsberg A/S cut profit forecasts amid sinking demand. Foster’s closed at A$4.96 in Sydney trading yesterday. The shares soared as high as A$5.21 a share following the June 21 offer before falling as low as A$4.66 amid turbulent markets.
“Highly volatile equity market conditions have weakened Foster’s bargaining position, as has the absence, to date, of rival bidders,” analysts including Andy Smith at MF Global in London wrote in a note.
Representatives of competitors Asahi Group Holdings Ltd., Suntory Holdings Ltd. and Anheuser-Busch InBev NV (ABI) declined to comment on the offer or their intentions. A spokesman for Heineken NV (HEIA) said its aim was to expand in emerging markets.
No Hostile Takeovers
SABMiller, which hasn’t made a hostile purchase in the more than two dozen acquisitions it has made since 1999, may take a page from InBev NV, Carlsberg and Heineken’s handbooks, said Gerard Rijk, an analyst at ING Groep in Amsterdam. When its first approach to buy Anheuser-Busch Cos. was rejected in 2008, InBev raised the price by 7.7 percent to secure the industry’s largest purchase ever. Carlsberg and Heineken increased a joint bid for Scottish & Newcastle Plc by 11 percent to 800 pence.
“We’ve lost the opportunity of a 10 to 15 percent higher bid” for Foster’s from SABMiller, Rijk said. “That’s lost in the stock market crash” since the June offer, said the analyst, who estimates that most renewed bids in brewing transactions have been accepted at a similar increase to the original price.
SABMiller’s hostile offer applies more pressure to the Foster’s board to start talks, yet “keeps a lid on ultimate bid price expectations,” said Citigroup Inc. analysts including Andy Bowley in a report to clients. Citigroup doesn’t expect SABMiller to be successful at the current price, estimating it will need to raise the offer to about A$5.20 to secure a deal.
Andrew Butcher, a spokesman for Foster’s external media adviser Butcher & Co., declined to comment on the bid. Nigel Fairbrass, a London-based spokesman for SABMiller, declined to comment beyond the company’s statement.
Foster’s is worth about 12.3 times forward earnings before interest, taxes, depreciation and amortization in a bid situation, according to Citigroup, which recommends investors “hold” their Foster’s shares. SABMiller said in June that the offer valued the Australian maker of Victoria Bitter at about 12.5 times Ebitda and stuck by that valuation yesterday. InBev paid about 13.2 times Anheuser’s earnings before interest, tax, depreciation and amortization, according to Bloomberg data.
Kirin Holdings Co. paid 10.5 times Ebitda for the 54 percent of Lion Nathan Ltd. it didn’t already own in 2009 in a deal that gave it full ownership of Australia’s second-largest brewer, Bloomberg data shows. The average multiple for key beer- industry transactions in the past five years was 13 times earnings, Nomura Holdings Inc. estimated after the prior offer.
Foster’s, which reports earnings on Aug. 23, said last month it may buy back shares or boost dividends after winning a dispute with the Australian Commissioner of Taxation. Foster’s will get A$390 million in cash refunds and interests and is reviewing its dividend policy and capital management options.
SABMiller’s hostile bid “makes sure that Foster’s management actively consider their options, especially with regards to how they handle cash distributions following the recent positive tax ruling, at next week’s full-year results,” said Simon Hales, an analyst at Barclays Capital in London. “SAB are aware undoubtedly that the numbers next week are not going to be particularly brilliant.”
In building SABMiller from Africa’s biggest brewer, Chief Executive Officer Graham Mackay has earned a reputation for not paying too much for purchases. He shunned buying the beer unit of Fomento Economico Mexicano SAB last year after Heineken paid a price it deemed too high. Foster’s, the most profitable independent major brewer, would be his biggest purchase yet and give SABMiller about half the Australian beer market.
The maker of Grolsch and Castle lager “is putting it in holders’ and the board’s minds that they’re not an open chequebook -- that they’ve ascribed fair value to the asset and aren’t going to overpay for the business,” Hales said.
SABMiller has a higher exposure to emerging markets than most rivals and is therefore considered to have less to lose by increasing its exposure to developed markets with an acquisition of Foster’s. The percentage of earnings from markets outside the U.S. and western Europe would drop to about 70 percent after buying the brewer, from more than 80 percent now, Deutsche Bank AG analyst Jonathan Fell has estimated.
SABMiller said the bid will be funded from existing resources and new debt facilities. Turning the offer hostile is unlikely to affect SABMiller’s credit ratings, Fitch Ratings said, adding that its leverage calculations wouldn’t change materially even if the price were raised by 10 percent.
18 Авг. 2011