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. ...
Sapporo Favors Vietnam Over China as Tropical Beer-Guzzling Grows: Retail
Japan’s oldest beer maker, Sapporo Holdings Ltd. (2501), pulled out of China in 2004 and is boosting production in Vietnam. Rivals Asahi Group Holdings Ltd. (2502) and Kirin Holdings Co. have bought Southeast Asian companies to help offset domestic beer sales that have slumped for at least six years.
The brewers are making the fastest growing major economy, China, a lesser priority because of slowing population growth and strong competition. The Japanese companies’ push to tap younger markets in Southeast Asian countries such as Vietnam may boost sales and margins. It also pits them against global brands including Amsterdam-based Heineken NV (HEIA) and Copenhagen-based Carlsberg A/S.
Vietnam “has 90 million people whose average age is 28 years and love to guzzle beer,” said Yoshiyuki Mochida, who heads Tokyo-based Sapporo’s international business. “It’s an era of the warring states for business in Vietnam. If you fall asleep there, your head will be lopped off.”
Vietnam retail beer sales will probably rise 20 percent to 96 trillion dong ($4.6 billion) this year, or less than a tenth of China’s 360 billion yuan ($57 billion), researcher Euromonitor International estimated. The country’s beer consumption per capita was 27.2 liters last year, trailing China’s 31.5 liters and equivalent to about a third of that in the U.S., according to research by Kirin.
Asahi dropped 0.1 percent to 1,694 yen at the close of trading in Tokyo. Kirin rose 1.7 percent to 939 yen and Sapporo climbed 0.3 percent to 303 yen.
While China accounted for 71 percent of the Asia-Pacific region’s beer market by volume last year, it contributed 16 percent of profit, Heineken Chief Executive Officer Jean Francois van Boxmeer said Dec. 8. The average price of beer in China is about 25 euros ($33) per 100 liters, compared with 51 euros in India, 60 euros in Vietnam and 182 euros in Australia, he said.
Asahi is looking at Indonesia, Vietnam, Thailand, the Philippines and Malaysia for potential acquisitions, said company President Naoki Izumiya. China’s beverage market will be hurt from 2015 by slower population growth from the nation’s one-child policy, he said.
Japanese brewers (2503), serving a home market with per-capita consumption of 45.4 liters, need to look to countries such as Vietnam for growth. The Japanese beer industry’s 2010 domestic sales by volume, including lower-malt drinks, is 18 percent lower than a decade ago after sliding for six consecutive years, according to Kirin’s research.
Facing the Facts
“Consumption is tied in with population and we have to face this fact squarely,” Kirin Chief Executive Officer Senji Miyake said.
Kirin has a head start in Southeast Asia, said Akane Nakagawa, an analyst at Mitsubishi UFJ Morgan Stanley, with an “outperform” rating on the stock and a 1,500 yen price target. Sapporo, which started beer production in Southeast Asia last month, is next, she said.
While Asahi lags behind the other two, it may benefit from synergies as it integrates Malaysia’s nonalcoholic drink maker Permanis Sdn., which it acquired in the second half of 2011, Nakagawa said.
Nakagawa has a “neutral” rating on Asahi, which has gained 7.7 percent this year, compared with 18 percent declines for both Sapporo and Kirin. The broader Topix index has lost 20 percent in the period.
Southeast Asia offers opportunities because of a relative absence of competition, said Mikihiko Yamato, an analyst at JI Asia who recommends buying Kirin shares. The “best-case scenario” would be for the Japanese companies to buy closely held beverage makers where they can negotiate directly with the owners, he said.
Japanese brewers have found China a tough place to do business because a handful of brands dominate China’s beer industry.
“Their market share there can’t rise,” said Tokushi Yamasaki, an analyst at Daiwa Securities Capital. “Competition is too fierce in China.”
China Resources Enterprise Ltd. (291), the maker of Snow beer with SABMiller Plc., has a 22 percent share, Tsingtao (600600) Brewery Co., part-owned by Asahi, has 14 percent, and Anheuser Busch InBev NV (ABI) has 12 percent, according to Euromonitor.
Shares of China Resources fell 1.5 percent to HK$27.05 at the close in Hong Kong. Tsingtao dropped 0.6 percent to 33.16 yuan at close in Shanghai.
“There are giants in the Chinese beer market and we have no chance to go it alone,” said Kirin’s Miyake. “There is still a chance for us in Vietnam from our market analysis.”
China’s population is also aging. People over 60 years old accounted for 13.3 percent of the population last year, nearly 3 percentage points higher than in 2000, according to government statistics.
The median age of Vietnam’s population is 27.8 years, compared with 35.5 years for China’s 1.3 billion people, according to the CIA World Factbook. Vietnam’s population will grow 1.2 percent to 90.4 million next year, according to International Monetary Fund estimates compiled by Bloomberg.
Government estimates in China, which put in place a one- child policy in 1979, show population growth slowing in the decade through 2010, compared with the previous 10-year period.
The total population of Indonesia, the Philippines, Vietnam, Thailand and Malaysia will expand to 553 million in 2016 from 519 million this year, according to IMF estimates compiled by Bloomberg. Japan’s will probably contract 1.1 percent to 127 million in the same period, the data show.
Southeast Asia also offers the potential for higher beer margins. Asahi’s operating margin of 9.7 percent in the third quarter compares with 27 percent for the Philippines’ San Miguel Brewery Inc. (SMB) and 22 percent for PT Multi Bintang Indonesia, according to data compiled by Bloomberg. Kirin owns about 48 percent of San Miguel Brewery, which dominates the Philippine beer market.
Vietnam may be an easier market to break into because the beer market isn’t dominated by a few low- and mid-priced brands. Saigon Beer-Alcohol Beverage Corp.’s Saigon has the biggest market share of 33 percent, according to Euromonitor, while the Heineken brand has 7.7 percent.
Carlsberg’s namesake has 1.1 percent and other brands it sells, including Huda and Tuborg, have at least 8 percent. Japanese brewers’ shares were too small to be tracked by the researcher.
‘No Cultural Walls’
Vietnam, which has become a production hub for companies from Intel Corp. to Honda Motor Co., is aiming for 6 percent gross domestic product growth next year, Prime Minister Nguyen Tan Dung has said. Japan’s economy is set to expand 1.66 percent next year, according to the median of nine economist forecasts compiled by Bloomberg.
The chances of Japanese brewers succeeding in Southeast Asia are high, said Mitsubishi UFJ’s Nakagawa. “Vietnamese have no problems consuming Japanese products and there are no cultural walls.”
Local and global competitors may be pressured as the Japanese brewers come in. “Among the imported beer makers, Carlsberg and Heineken will see a hit with the Japanese brewers coming in,” said Mizuho Securities analyst Hiroshi Saji. “But the market as a whole will expand, so everyone should gain.”
Heineken “welcomes competition” and is already competing with Japanese companies in other Asian markets, John-Paul Schuirink, a spokesman, said by e-mail. The company has been gaining market share in Southeast Asia, he said.
Asahi, which entered China in 1994, bought about 20 percent of Tsingtao (168) after facing competition from local brands. Kirin, which faced similar difficulties, formed a soft-drink venture with China Resources Enterprise.
Sapporo pulled out of China after about eight years and exports small amounts from Japan. It intends to increase beer production as much as fivefold in Vietnam by 2019. Mochida said his company will now “go hunting and be concentrating on Southeast Asia for the next 10 years.”
13 Янв. 2012