The beer market dynamics in Russia is approaching zero, yet major brewers are divided into those who developed considerably in 2017 and those who considerably reduced their volumes. For instance, company Efes has managed to substantially extend their sales due to restrained pricing policy and activity in the modern trade. Heineken has also demonstrated an excellent performance promoted by significant increase of advertisement budgets launching a non-alcohol sort of the title brand and unusual activity in the economy market segment. Carlsberg and AB InBev have been focusing on margins and lost a market share of their inexpensive brands. Serious dependence on PET package and mass enthusiasm about Zhigulevskoe have negatively impacted the most of big regional brewers, that have been for the first time pressed by the leaders in the key sales channels, especially in Volga and Central regions. In the small business there has been a noticeable slowdown in appearing of new restaurant breweries, yet the number of craft breweries has been growing rapidly. In 2018, the beer market is likely to grow a little, while the share of AB InBev Efes may decrease due to the integration. ...
“Catalogue of Russian Beer Producers 2018” includes 1070 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft microbreweries.The catalogue includes 32 large breweries, 75 regional breweries, 693 industrial mini- and microbreweries as well as 270 restaurant breweries. ...
Global hop marketA local alternative to mass beer suggested by independent brewers has been successful and is now altering the global market. Beer is becoming more diversified, so transnational companies have to accept the new game rules and to switch focus to young and fast growing markets. All these processes increased the demand for aroma and bitter hop as well as their acreage expansion on two continents. However now there appeared a downward trend of alcohol consumption in the world, so even special sorts can soon turn to be sufficient. In this connection the dynamic American hop market is already facing some problems. EU hop producers have become more cautious, they are not racing to exceed the demand and look forward with more confidence, judging by the contract terms.
Hop Market in RussiaGermany still dominates the Russian market, yet over the recent two years one has been able observe a continuous success of Czech hop suppliers. Their expansion and growing popularity of hops from the United States became the drivers of supplies growth in 2016 despite the preceding modest harvest crop in the EU, as well as the factor of relative stability in 2017. In this connection, in 2017, the ratio of the varieties continued to shift towards the aroma ones, and the supplies of Magnum hop and other alpha varieties were reduced. However, the import of bitter hop pellets is partially replaced by extracts, especially from the major beer manufacturers. Total volumes of alpha acid supplies, according to our estimation, decreased by approximately 5% and returned to the level of 2015. Barth Haas Group continues dominating the hop products market; HVG also increased its weight. At the same time, Morris Hanbury significantly reduced the supplies in 2017.
Premium Chinese beer a bitter brew for foreign brands
China's beer consumption, which hit 450 million hectoliters last year -- nearly twice that of the United States -- is expected to grow 5 percent per annum in the next few years, double the 2.5 percent growth forecast for the global market this year.
Premium draught beers make up only 5 percent of China's overall beer market, compared with 50 percent in developed markets such as France and Germany, and 30 percent in the United States.
Analysts expect premium beer to account for a quarter of China's annual production in five to 10 years, largely driven by rising brand awareness and lifestyle changes following the emergence of a wealthy middle class.
For Paul Sin, a Hong Kong Chinese merchant in his 60s, drinking beer is not just a matter of taste. It is also about national pride.
"We are now able to taste good beer produced by ourselves, taste the success of our economic development with our taste bud," said Sin as he sipped a Tsingtao Draft in an upscale Hong Kong restaurant.
"Our beer is now good enough to stand side by side with Heineken and Blue Girl," he said. Blue Girl is made by South Korea's Oriental Brewery Co Ltd .
Major local brewers are likely to see their premium segment growing more rapidly than foreign brands, helped by their vast sales network, nationwide presence and cost advantage.
That could be a major threat to foreign brands such as Anheuser Busch InBev SA , which dominates the premium beer segment in China with a 45 percent share.
Tsingtao Brewery Co Ltd <0168.HK> <600600.SS> is a distant second in the segment with a 15 percent share, while Heineken NV and Carlsberg AS trail at 7.5 percent and 6.1 percent, respectively.
Premium beers, priced 30-50 percent more than regular beers, offer bigger margins despite increased cost of production due to the need for higher quality ingredients and packaging, as well as more spending on marketing and advertising.
Production of Tsingtao's flagship products, including its green bottled Tsingtao Pure Draft labeled "stylish and intriguing," rose 11 percent in the third quarter, versus flat growth for its none-core brands.
China's largest brewer CR Snow, which uses the slogan "The Great Expedition" for its premium Snow brand, reported a 48 percent jump in the sales of premium beer in the first half, accounting for 21 percent of its sales, up from 17 percent a year earlier.
CR Snow is a joint venture between China Resources Enterprise Ltd <0291.HK> and SABMiller Plc .
"The industry is trying to raise average selling prices to improve margins to levels we see internationally," said London-based David Serre, who oversees Credit Suisse's global beer industry investment banking business.
"If you get the premium strategy right, get the pricing right, the profit growth prospects are truly amazing."
In the broader beer market where the top four companies together command more than 55 percent, AB InBev is the only major foreign company. The company has a 11 percent of the market, versus CR Snow's 21 percent, Tsingtao's 14 percent and Beijing Yanjing Brewery Co Ltd's <000729.SZ> 11 percent.
Encouraged by their success in regular beers, Tsingtao, CR Snow and Yanjing have been racing to pump out more premium beer to challenge the foreign dominance of the segment, which is growing more than twice faster than the overall beer market.
"I don't see that as a major near-term threat but in the long run it is potentially, yes," said Vijay Karwal, managing director and head of Asia consumer, retail and healthcare investment banking for RBS in Hong Kong.
Chinese brewers are offering premium beers at 20-25 percent cheaper than foreign brands and utilizing their extensive sales network, undercutting foreign brands.
UOB Kay Hian analyst Jason Yuan estimates gross profit margins for premium beer at 50-60 percent versus 30 percent for mainstream products.
Rapid growth of Chinese beer companies, fueled by an acquisition binge over the past decade and cut-throat price competition, have left them with lower margins, driving them to produce more premium beers that carry higher margins as Chinese consumers trade up.
Operating margins at Tsingtao and Yanjing are less than 10 percent, below the 12-17 percent at Heineken, Carlsberg and AB InBev.
Per capita beer consumption in 20 major Chinese provinces averages less than 33 liters, way below 100 in some European countries, 40 in South Korea and Japan and 65 in Brazil.
Despite soaring costs and competition, Chinese brewers' shares are one of the most expensive among beer brands.
Tisngtao is trading at 24 times estimated earnings and China Resources at 27 versus AB InBev's 15 and Carlsberg's 10.
Shares of Tsingtao, China Resources and Yanjing have soared in the past decade, with Tsingtao posting a twenty-fold jump. Tsingtao's shares in Hong Kong were little changed so far this year, beating a 14 percent fall in the benchmark Hang Seng Index <.HSI>.
"Tsingtao is a long-term hold," said Nomura analyst Emma Liu, adding long-term investors should look beyond its latest results.
Tsingtao, about 20 percent owned by Japan's Asahi Group Holdings <2502.T>, posted a nearly 1 percent fall in third-quarter profit as high barley costs hit margins and poor weather slowed growth in sales volume.
TOUGH TO CRACK
China, one of the fastest-growing beer markets in the world, has proven to be a tough nut to crack for most foreign brewers.
Despite two decades of efforts, foreign brands have a relatively small slice of China's overall market because of a fragmented industry, fierce competition and distribution bottlenecks.
Foreign brands such as Carlsberg and Foster's Group Ltd entered China in the 1990s, setting up shops by themselves or with small local producers, only to see their start-ups drown in a sea of cheap domestic beer.
Foreign brewers have tried different strategies, such as setting up ventures with large Chinese partners or taking strategic stakes in relatively big Chinese brewers.
This appears to be working as China's contribution to the revenue of foreign brewers has grown in recent years.
However, the prospects for foreign beer brands in China remain unclear as their local partners focus on promoting their own brands.
The most successful foreign brewers in China is probably SABMiller, which formed the CR Snow joint venture in 1990s with state-run retail, food and beverage conglomerate China Resources Enterprise.
Leveraging China Resources' extensive distribution network, CR Snow has become China's top brewer and brand.
"Over the next five to 10 years, you will find more and more mid-cap Chinese brewers becoming acquisition targets for large Chinese brewers and international brewers willing to play in China," said Credit Suisse's Serre.
3 Ноя. 2011