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. ...
Foster’s May Use Buyback to Fend Off SABMiller
Fosters, which reports full-year earnings tomorrow, may return as much as A$1 billion ($1 billion) in capital to shareholders, using cash from tax refunds and lower debt to boost the share price, analysts at Citigroup Inc. said.
Australia’s biggest brewer is fending off SABMiller’s bid and trying to stem market-share losses as natural disasters and slumping consumer sentiment crimp the developed world’s widest brewing profit margins. Pollaers, a former Australian Navy weapons engineer who spent almost 20 years at spirits maker Diageo Plc (DGE), is betting that spending more on brands and lowering production costs will restore profit growth.
“He seems to be the right man in the right place,” said Theo Maas, who helps manage $5 billion of equities at Arnhem Investment Management Pty. in Sydney. “He is managing in a very difficult environment, and while it would be a lot easier to just deliver strong numbers and say it only gets better, he can’t.”
Earnings before items probably fell 7.7 percent to A$494 million in the 12 months ended June, according to the median estimate of three analysts surveyed by Bloomberg News.
Foster’s shares fell 0.6 percent to A$4.90 at the 4:10 p.m. close of Sydney trading, matching SABMiller’s cash offer. The stock has risen 7.2 percent so far in 2011, and has gained in three of the past nine years.
Pollaers has been CEO of Foster’s since it completed the spinoff of Treasury Wine Estates Ltd. in May, ending the company’s 15-year involvement in wine that cost more than A$8 billion to build and resulted in about A$3 billion of writedowns.
The company has refused to enter talks with SABMiller since rejecting a bid on June 21, arguing the A$4.90 a share offer, which will be reduced by the amount of any dividends paid, “materially undervalues” the company.
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 the offer valued Foster’s at about 12.5 times earnings before interest, tax, depreciation and amortization and stuck by that valuation last week. InBev NV paid about 13.2 times Anheuser-Busch Cos. in the 2008 purchase, the industry’s largest, that created Anheuser-Busch InBev NV, according to data compiled by Bloomberg.
SABMiller said Aug. 17 it would go directly to Foster’s investors after the board declined to start negotiations.
“We are not saying we would never engage,” Pollaers said in Melbourne on July 29. “The value put on the table there was just so far away from reality, it wasn’t worth engaging.”
Pollaers wasn’t available for an interview before the results release, said Andrew Butcher, a spokesman for Foster’s external media adviser Butcher & Co.
“Foster’s is likely to increase the stakes on Aug. 23 with its fiscal 2012 outlook commentary, requiring SABMiller to increase its bid,” analysts at Nomura Holdings Inc. led by David Cooke, said in a Aug. 17 report. “We anticipate Foster’s commentary will include detail on cost reduction programs and capital management.”
Foster’s net income will probably be A$714 million for the year ended in June, according to the average of three analysts’ estimates compiled by Bloomberg, which included contributions from Treasury. The company posted a loss of A$464 million in the previous year on writedowns from the wine business.
Foster’s has said it’s increasing advertising on brands including Victoria Bitter, Australia’s best-selling beer, and Pure Blonde and is paring the workforce at its Melbourne brewery to cut costs.
“The company’s first beer-only result for 15 years will likely be characterized by declines in both net sales revenue and margins,” Andy Bowley, an analyst at Citigroup, wrote in an Aug. 18 report. He rates the stock “hold.”
Prior to taking charge of the whole company, Pollaers ran Foster’s domestic beer business for 13 months. He has a masters of business administration through a joint program by INSEAD and Sydney’s Macquarie University and has degrees in electrical engineering and computer science, according to Foster’s website.
He started at London-based Diageo, the maker of Johnnie Walker scotch, in 1990 and had roles at the London-based company including U.K. finance director, Australian head and President of the Asia-Pacific region before joining Foster’s.
The takeover offer from the maker of Miller Lite and Grolsch will have to rise by about 6 percent to A$5.20 to succeed, according to the median estimate of 13 analysts surveyed by Bloomberg News.
“The failure of competing bidders to emerge, volatility in world financial markets and the prospect of poor trading in Australian beer in the six months to June, appear to have strengthened SAB’s hand,” analysts at Barclays Capital including Simon Hales wrote in an Aug. 18 note.
Foster’s beer operating margin, or earnings before interest and taxes as a proportion of revenue, may fall to 37.5 percent from 38.3 percent in their first decline in a decade, according to Citigroup.
That’s still more than the 23.5 percent of SABMiller and 30.8 percent at AB InBev, the world’s biggest brewer, according to data compiled by Bloomberg.
January’s flooding in Australia’s Queensland and Victoria states, two of the nation’s three most populous, as well as the February earthquake in New Zealand’s Christchurch sapped demand. Australian consumer sentiment last month fell to the lowest level since May 2009, according to a Westpac Banking Corp. and Melbourne Institute survey.
“The value in Foster’s has always been about the longer- term cash potential of the business and limited reinvestment requirements,” Paul Van Meurs, an analyst at Deutsche Bank AG in Sydney, said in an Aug. 18 report. “While the consumer environment undoubtedly has taken a turn for the worse in the last few weeks in Australia, we find it hard to believe that structural change has taken place during this period.”
22 Авг. 2011