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3-2019

Russia: Positions of Brewing Companies

The 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 brands

In 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 2019

During 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.

A flat tax on alcohol could be a heady prospect for the new owners of Foster’s

As SABMiller mulls over the many ways it can extract hundreds of millions of dollars in efficiencies from the Foster's Group - including overhauling its Victorian and NSW breweries - it will have one eye focused on this week's tax summit to see if a proposal to introduce a flat tax on alcohol gets any oxygen.

A flat tax would simplify the tax system and change the economics of the entire industry. Put simply, a flat tax across the industry would slightly increase the price of beer sold in pubs and clubs, slightly reduce the price of bottled beer and dramatically reduce the price of spirits and alcopops. For wine companies it would have a profound impact. It would substantially lift the price of cheap wine and reduce the price of premium wine.

Right now there are more than 13 different alcohol taxes at play, many of which are antiquated, and some that are at odds with the government's health and social policies.

Advertisement: Story continues below A flat tax would be watched with interest by SABMiller, particularly the spirits business. Even before it has taken control of Foster's it has taken the first steps to lifting morale in the company and it is looking at the best way to improve the economics of the company's beer production.

The day after the Foster's board agreed to the renewed $12.3 billion takeover offer for the country's biggest beer company, SABMiller is understood to have given staff the afternoon off as a symbol of goodwill and a portent of positive things to come. SABMiller is also believed to be looking at how deeply it can take the knife to head office at Southbank, which is carrying a lot of fat and has been the subject of criticism over the years from its team in Sydney. And in terms of improving efficiencies the talk is that it will scale up the Bluetongue Brewery in NSW, which was previously a joint venture between SABMiller and Coca-Cola Amatil, close the brewery in Abbotsford, Victoria, which is old, inefficient and land locked, open up a small brewing establishment in country Victoria, where it would get tax concessions, and sell the Foster's Fijian distillery to Coca-Cola Amatil. All of this would reduce the company's cost per hectolitre of beer.

Bank of America/Merrill Lynch analyst David Errington co-authored a report on June 27 which looked at the cost of beer globally. The report found Foster's had the highest cost of production in the world. It estimated Foster's total cost of beer per hectolitre was $163, compared with $148 for Lion Nathan, $75 for SABMiller Europe and $73 for SABMiller in South Africa.

The Abbotsford brewery is one of the reasons why Foster's cost of production is so high. According to Errington, if the Abbotsford brewery was closed and a new one built, Foster's earnings before interest and tax could rise by at least $100 million to $150 million a year.

If politics didn't come into play and the tax was extended to wine, it would make the country's listed wine company Treasury Wine Estate look cheap. The Treasurer, Wayne Swan, has come out saying the government would not change alcohol tax on wine ''in the middle of a wine glut'' but it is only a matter of time before governments realise the tax system exacerbates the glut by encouraging production on the basis of volume as opposed to value.

Beer, spirits and ready-to-drink products, also known as alcopops, are taxed on the basis of their alcohol content, with spirits and alcopops taxed at a higher rate because of the perceived greater risk of abuse. Wine is the big anomaly. It is taxed on price rather than volume. This means low-value cask wine attracts little taxation while more expensive bottled wine attracts higher tax under the wine equalisation tax system. Various studies have been conducted over the years to estimate the impact of a flat tax.

One report, prepared for the Henry tax review, estimated that a flat tax would result in the price of a $35 bottle of spirits falling to $22.45, a bottle of alcopops would fall from $3.30 to $2.42, a $14 wine cask would jump to $31.07, an $8 bottle of wine would increase to $10, a $13 bottle of wine would rise to $13.87, an $18 bottle of wine would fall slightly and a $30 bottle of wine would dip to $27.53.

In terms of draught beer, the study found that a pot of light beer would go up 36?, a pot of mid-strength beer would rise 29?, full-strength beer would go up 23?, and packaged beer would be virtually unchanged. Such a move would have profound implications for the wine industry, which remains under serious pressure with systemic global oversupply, a high currency, drought and bad weather, and the effect of the slowdown on global demand.

It would decimate the cask wine market, which represents about half of all wine sold. And it would decimate winegrowers in the Riverina, Griffith and the Riverland. Treasury Wine Estate specialises in premium wine and so it would do wonders for its bottom line.

Regardless, any changes to alcohol tax are politically and practically challenging. The debate is complex and many in the industry believe it would be too politically damaging to introduce a simple taxation system taxing all alcohol in the same way.

3 Окт. 2011

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