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’s Asia chief Ari Mervis raises a glass to Snow Beer
All wrong. For the past three years, the world's top-selling beer is a pale, Budweiser-like brew that barely anyone in the West has ever heard of, let alone tasted. It is Snow Beer.
The Chinese drank 16.5bn pints of Snow last year, making it easily China's favourite and roughly twice as popular as Bud Light, the global beer from which it snatched the number one spot back in 2008.
Snow may not yet generate as much profit for SABMiller, the brewer that part owns it, as Bud Light does for its rival, Anheuser-Busch InBev, but the Chinese beer market is booming, with around 10pc growth each year.
By contrast, US and European beer drinkers, sobering up fast thanks to the economy's poor state in the developed world, are steadily reducing their own consumption.
"A lot of foreigners who have been to the mainland are surprised when they stop by my office," said Ari Mervis, the head of SABMiller in Asia, from his base in Hong Kong. "They ask me: 'What is this brand Snow? We did not see it anywhere.'"
"And of course I tell them it is the biggest beer in China, ahead of rivals who have been around for 110 years when we have only been going for 15. But it is in a very Chinese part of the market, not in places where foreigners go to."
In fact, Snow is such a domestic Chinese product that it is not even available in Hong Kong, just across the border. The beer that most foreigners see, both inside and outside China, is Tsingtao, first brewed by Germans in the north-east of the country, and now owned partly by Asahi, the Japanese conglomerate, a Chinese entrepreneur and the Chinese government. More than 11bn pints of Tsingtao were sold last year. And Tsingtao is said to be up against SABMiller in the race to take over Foster's, after the South African brewers put up a ?6bn hostile offer last week.
Snow is not marketed as aggressively as Tsingtao. Indeed, it barely advertises at all. But its parent company, which is 49pc-owned by SABMiller and 51pc-owned by China Resources, has steadily gone about buying up China's network of local breweries, traditionally the main providers of beer in each region, moving from the north-east down the coast and then to the south and inland. The spate of acquisitions has given Snow control of large areas of the country where it dominates the local market.
"When we entered the market in 1993, we did so very humbly with only three breweries," said Mr Mervis. "Now we have 80 and there are 500 across the country," he added.
In the beginning, as Tim Clissold, a former banker who invested heavily in China in the 1990s, relates in his book Mr China, the Chinese beer market produced "a great deal of froth". International investors piled into the market, but there was little quality control at breweries that had been state-run for decades.
"Late that summer, I was given several samples of our beer that had been recovered from a Beijing market," wrote Mr Clissold of the Five Star brand he had invested in.
"One bottle had leaves in the bottom, several contained only an inch of beer and another was full but contained a large ball of adhesive tape. We could never figure out how it ever got in there."
Mr Mervis admits that when he started in China, some of the breweries reminded him of his days in Russia, when he would see "places with just a kettle and a tank that had been set up for distilling vodka".
Nevertheless, in the early days of Snow, he said the team looked at under-performing breweries as "an opportunity". These days, of course, the breweries have all been upgraded with the latest equipment.
"The technological and technical advances have been remarkable," he said. "When we look at our breweries globally there are some in China that are right up there, in terms of low water usage, energy per hectolitre (100 litres), and output per person."
He added: "In terms of quality we have focused on consistency of quality, and we have rationalised the brands – so there used to be over 60 brands of Snow and now there are just five key varieties. We focused on the glass, the labelling, the crowns."
Earlier this summer, Snow's expansion continued down in Jiangsu province, Shanghai, and then in Zhejiang, with the ?111m purchase of four major breweries, one of which produces one of Shanghai's favourite beer brands, REEB. The sellers were Asahi and Heineken.
"For us it was important to have control of those areas," said Mr Mervis. "Hangzhou in particular is a large and affluent city, very prosperous and attracts a lot of visitors." He declined to comment on why Asahi and Heineken had sold, beyond saying that the Japanese brewer was focusing its efforts on Tsingtao and that Heineken is after China's premium market. Last week, Snow struck a ?25m deal to take a 70pc stake in Kweichow Moutai beer, a spin-off brand of China's most famous "baijiu", or white spirit, distillery.
With the purchase of each new brewery, Snow targets a 50pc share of the local market, slowly replacing the local brewery's brand with its own and courting distributors. The focus on logistics, rather than image, has so far been the key to its success.
The product itself is difficult to distinguish from the rest of China's beers, all of which tend to taste the same to a European palate, much in the way that American beers do, but it is a good example of where localisation is essential to success in China.
According to SABMiller, the beer is "bright, almost transparent in nature, with a tight pure white foam". According to beer enthusiasts outside of China, posting on the BeerAdvocate magazine's website, it is "bland and watery".
"The Chinese do not look at beer the way that you do in the UK, where people go to a pub to drink. Chinese still see beer mostly as an accompaniment to a meal," said Mr Mervis. "Half of all beer is drunk in restaurants, and with spicy food, they want a less filling and less heavy beer. The prefer low alcohol (typically between 3pc and 4pc) and a more American taste profile," he added.
Looking forward, Mr Mervis predicted that Snow's march of acquisitions would start to slow. The jumps that saw Snow double in size between 2005 and 2006 are unlikely to be repeated.
"I cannot see much on the horizon," he said. "It is a big challenge to make sure acquisitions can see a clear path to profitability," he added. "It is hard in China, because to do well in fast-moving consumer goods, you need to be big. But you have to balance that investment. We want to build an unassailable lead but we want to be profitable, too."
Instead, he hinted that the company's experiments with moving the brand towards the premium sector had been successful, and that with the national coverage that Snow has, it could be time to start a national advertising campaign.
"Beer is not really seen as a real premium product in China so far," he said. "But in the future it may move that way."
23 Авг. 2011