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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.

Heineken N.V. Trading Update – Third Quarter 2011

Heineken N.V. today announced its trading update for the third quarter of 2011. In the quarter:

On an organic1 basis, revenue grew 3.0% driven by higher volumes and improved price and sales mix;

Higher marketing investment supported total consolidated volume and consolidated beer volume organic growth of 1.1% and 2.2%, respectively;

Volume of the Heineken® brand in the international premium segment increased 4%, outperforming group beer volumes, supported by the continued success of the global brand campaign "Open Your World";

Organically, EBIT (beia) was lower, primarily due to higher planned costs;

Reaffirm outlook for full year 2011 net profit (beia) to be broadly in line with last year, on an organic basis;

The share repurchase programme in connection with the acquisition of FEMSA Cerveza has been completed ahead of schedule.

1An explanation of key volume and financial terms used are provided under the heading 'Definitions' at the end of this update.

Financial ResultsResults During the quarter, revenue grew 0.6% to €4,645 million, including a positive first time consolidation impact of €32 million, or 0.7%, mainly related to the acquired breweries in Nigeria in January 2011. Foreign currency movements contributed to a negative translational effect on revenues of 3.1% in the quarter. This primarily reflects devaluation of the Nigerian naira, Polish zloty, British pound and Mexican peso versus the euro reporting currency. On an organic basis, revenue grew 3.0%, reflecting a positive volume effect of 0.5% (including the impact of country mix) and improved price and sales mix of 2.5%. 

On an organic basis, EBIT (beia) was lower in the quarter. While revenues increased and ongoing TCM cost savings were realised, the effect of poor weather in July and early August resulted in negative operational leverage in Europe. In addition, higher planned marketing spend, upfront capability building investments in Commerce and Business Services and a low single-digit increase in input costs per hectolitre reduced profit. In the quarter, a slight positive consolidation scope impact was more than offset by an adverse translational effect from foreign currency movements.

Heineken's share of net profit of associates and joint ventures grew substantially, driven by strong performances of the Asia Pacific Breweries and South African joint venture operations.There were no exceptional costs in the quarter. Reported net profit in the quarter was €525 million, broadly in line with the prior year.  

Full Year OutlookHeineken confirms its earlier outlook for net profit (beia) to be broadly in line with last year, on an organic basis. The Company reaffirms its previous cost synergy target, related to the acquisition of FEMSA Cerveza, of €150 million by the end of 2013. The Company reiterates its estimate of an average interest rate of around 5.5% and does not expect material changes to the effective tax rate (beia) in 2011 (2010: 27.3%).

Volume Total Consolidated Volume

Q3 2011 (mhl)Change (%)Organic Change (%)Regions9 months 2011 (mhl)Change (%)Organic Change (%)
 18.4-3.0 -3.3Western Europe 50.6 -2.3 -1.2 
 14.64.8 4.8 Central & Eastern Europe 37.96.66.6
 7.110 6.2 Africa & the Middle East 20.8115.8
 12.90.2 0.5 The Americas 37.344-0.7
 0.412 12 Asia Pacific 1.1-5.29.1
 53.41.6 1.1 Total  147.711.5 2.1 

In the third quarter, total consolidated volume grew by 1.1% on an organic basis, with growth in consolidated beer volume (+2.2%) partly offset by lower volumes in wholesale operations and soft drinks. Volume of the cider category was broadly in line with the prior year.

Consolidated Beer Volume

Q3 2011 (mhl)Change (%)Organic Change (%)Regions9 months 2011 (mhl)Change (%)Organic Change (%)
 12.7-1.7 -1.7Western Europe 35.1 0.0 0.0 
 13.85.8 5.8 Central & Eastern Europe 35.67.57.5
 5.212 6.4 Africa & the Middle East 15.9157.8
 12.80.4 0.8 The Americas 37.151-0.7
 0.412 12 Asia Pacific 1.0-3.89.3
 44.92.7 2.2 Total  124.7 16 3.2

Group Beer Volume

Q3 2011 (mhl)Change (%)Organic Change (%)Regions9 months 2011 (mhl)Change (%)Organic Change (%)
12.8-1.7  -1.7Western Europe 35.4 0.3 0.0
16.04.9 4.9 Central & Eastern Europe 41.46.56.5
6.810 6.0 Africa & the Middle East 20.5115.9
14.80.6 0.9 The Americas 43.7410.6
6.53.8 3.8 Asia Pacific 20.19.76.1
56.92.7 2.3 Total 161.1143.5 
7.94.04.0 Heineken® volume  22.7 4.44.4 

Group beer volume development in the third quarter 2011Group beer volume grew 2.3% on an organic basis, with volume gains across four of the five regions.

In Western Europe, group beer volume decreased 1.7% organically. This primarily reflects the impact of unusually poor weather in July and early August across large parts of the region and ongoing economic uncertainty. However, group beer volumes showed a solid improvement in the latter part of the quarter as weather conditions became favourable. In the quarter, volume was lower in the United Kingdom, France, Netherlands and Spain, while volume in Italy grew in the low-single-digits.

In Central & Eastern Europe, group beer volume grew 4.9%, on an organic basis, driven by a strong volume rebound in Russia. Volume also increased in other key markets including Austria, Hungary and Romania, whilst volume declined in Poland and Greece. In the latter market, the effect of government austerity measures continues to impede consumer demand, leading to a high single-digit decline in volume in the quarter.

In Africa & the Middle East, group beer volume was up 6%, on an organic basis, led by high single-digit growth in Nigeria, Rwanda and our joint venture in the Republic of Congo. Volume of our South African joint venture grew in the mid single-digits, while volume in the Democratic Republic of Congo grew in the low single-digits. Volume in Egypt declined by high single-digits, reflecting a slower pace of volume decline compared with the first half of 2011. Heineken completed the transfer of three breweries acquired from the Sona Group to Nigerian Breweries in early October. The two breweries acquired in Ethiopia in August 2011 will be consolidated in the fourth quarter of 2011.

The Americas achieved organic group beer volume growth of 0.9% driven by higher volume in Brazil, the Caribbean region and the CCU joint venture in Chile and Argentina.
Depletions in the USA declined at a slightly slower rate versus the first half of 2011 with improving trends for the Heineken® brand and continuing strong double-digit growth of Dos Equis. Volume in Mexico was in line with the prior year period. The successful implementation of the commercial strategy and realisation of planned cost synergies in Mexico continues to support positive revenue and profit momentum in the country.

In Asia Pacific, group beer volume increased 3.8% organically, led by mid single-digit growth at our Asia Pacific Breweries joint venture, primarily driven by a continued strong performance in Vietnam. The Taiwanese and South Korean export markets grew strongly, while volume of the United Breweries joint venture in India grew moderately following strong comparative growth in the prior year quarter.

Global brand volume development in the third quarter 2011Volume of the Heineken® brand in the international premium segment grew in the third quarter and year-to-date by 4.0% and 4.4%, respectively. The Africa & the Middle East and Asia Pacific regions led this solid brand performance, up 18% and 15%, respectively, in the quarter. Strong activation around the "Open Your World" global marketing campaign supported brand growth in many key markets including the UK, Mexico, Brazil, Chile, Nigeria, South Africa, Vietnam and Taiwan. The Heineken® brand was launched in Mumbai in August 2011 and will be rolled-out to other major Indian cities in the coming months. Brand volumes declined in Greece and the USA, primarily reflecting the challenging economic conditions in these markets.

Volume of Desperados, the tequila-flavoured beer, grew 18% in the quarter. This follows successful launches in 10 countries since the beginning of 2011 and continued growth in existing markets, led by strong volume gains in France.

Volume of Strongbow was in line with the prior year quarter. Higher brand volumes in South Africa and Italy were offset by a low single-digit decline in the UK in the quarter.

Financial structureAt the end of September 2011, Heineken privately placed US$90 million of notes with a 6-year maturity, further improving the currency and maturity profile of its long-term debt.

On 3 October 2011, the Company announced that all 29,172,504 shares under the terms of the Allotted Share Delivery Instrument ("ASDI") concluded between Heineken N.V. and Fomento Econ?mico Mexicano, S.A.B. de C.V. ("FEMSA") were repurchased. All repurchased shares have now been delivered. Based on the current shareholders equity base of Heineken N.V., the weighted average diluted number of shares outstanding would be approximately 586.3 million for the full year 2011 and 576.0 million for the full year 2012. The net debt position at the end of September 2011 was broadly in line with the amount at 30 June 2011, despite cash outflows associated with an accelerated execution of the ASDI repurchase programme and recent acquisitions in Ethiopia.

Heineken continues to target a cash conversion rate of around 100% for the full year 2011.

27 Окт. 2011

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