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. ...
Weak Foster’s results give SABMiller’s offer a chance
An appreciation of the Australian dollar against sterling would mean that SABMiller was not only unlikely to enhance its A$4.90 (R36.76) a share offer but would use the A$500 million “cash return”, proposed by Foster’s chief executive John Pollaers, as an excuse to walk away from the deal.
Following last week’s release by Foster’s of a pedestrian set of results for the year to June, analysts and commentators appear to believe that SABMiller, the second-largest beer group in the world, is likely to succeed in its bid for control of the high-margin and cash-rich Australian beer group.
A number of analysts remarked that not only were the results on the weaker side of expectations but that Pollaers’ proposals for turning around the group were unconvincing. So unpersuasive were Pollaers’ revival plans that one analyst presumed he was already setting the scene for a compromise arrangement with SABMiller.
“Pollaers is an extremely ambitious individual and very competent, given what he did for Diageo in south Asia; if he could be convinced that there is a role for him at the second largest beer group in the world he might be persuaded to talk the board and shareholders into supporting the SABMiller offer”, remarked an individual who has worked with Pollaers.
However, analysts pointed out that such persuasion would have to include some sort of sweetener on the A$4.90 a share offer price.
The long list of conditions that SABMiller attached to the conditional offer it announced 10 days ago included that the offer would be reduced by the amount of any dividend paid and that any dividend payment would be limited to 15 Australian cents a share. Last week when Foster’s released its results, it announced a dividend of 13.25c a share.
Analysts believe SABMiller could lift its offer to just over A$5 a share, and allow the dividend, for a revived offer of an effective A$5.15 a share. This would represent a more appropriate premium for control of what Barclays Capital described as one of the few remaining sizeable and independent beer businesses in the world.
Significantly, after some volatility in the wake of the results announcement, the Foster’s share price appears to have settled at just over A$5.
Foster’s disappointing results, its pedestrian revival programme and the uncertainty surrounding global markets works to SABMiller’s advantage. In addition, the absence of any competing offer from one of the other major beer groups enhances the attractiveness of the SABMiller bid.
However, as the UK’s Financial Times noted last week in response to the results, while there has been no sign of another beer company making a bid, Foster’s is an extremely attractive cash-generating operation, which makes it an attractive private equity proposal. But the drivers of a private equity deal would have to be confident that they have access to the sort of management skills that can generate the improved performance that SABMiller is confident it can achieve.
In the absence of any competing offer in the coming weeks it seems likely that SABMiller will secure one of the last few remaining independents in this rapidly consolidating industry.
29 Авг. 2011