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. ...
SABMiller plc Trading Update
Lager volumes for the third quarter were 3% ahead of the prior year with good growth in all our regions with the exception of Europe and North America. Soft drinks volumes grew by 6% for the quarter with growth across all regions. Organic, constant currency group revenue grew 7% for the quarter. Group revenue per hectolitre grew 3% on the same basis supported principally by price benefits, with mix gains achieved in all regions except Europe. Overall, financial performance for the quarter was in line with our expectations.
In Latin America, lager volumes continued to show robust growth with volumes up 8%. Colombia's lager volumes increased by 6% with premium lager growth in excess of 30% due to successful seasonal offerings and campaigns. Continuing price restraint, improved weather and economic growth also contributed. In Peru lager volumes grew by 9% as consumers traded up from the informal alcohol sector supported by the national roll-out of the renovated Pilsen Callao brand and successful Cusque?a campaigns. Ecuador's lager volumes increased by 15% supported by the implementation of the direct service model and a focus on festivals and events which encouraged consumers to move into the beer category. In Central America lager volumes were up 6% with a particularly strong performance in El Salvador following the introduction of larger packs as part of our "affordability strategy". Soft drinks volumes in Latin America grew by 8%, with our non-alcoholic malt brands up 21% and now rolled out into Central America.
Europe's lager volumes were down 2%. Beer markets remain affected by intense competition, which continued negatively to impact mix, as well as fragile economic conditions. Volumes in Poland and Romania were both down by 6% reflecting the impact of planned de-stocking of wholesaler and distributor inventories as well as continuing competition in pricing and promotions. In the Czech Republic, domestic volumes grew by 2% reflecting the continued strong performance of brand and package innovations. Volumes were down 6% in Russia in a declining beer market. Strong growth continued in Ukraine where volumes increased by 20%.
MillerCoors domestic sales to retailers (STRs) declined 3.3% in the quarter on a trading day adjusted basis. Premium light brand volumes fell by low single digits with Miller Lite down mid single digits and a low single digit decline for Coors Light. The Tenth and Blake division saw double digit growth driven by the success of craft brands and beer merchants' programmes. Below premium volumes were down mid single digits. Domestic sales to wholesalers (STWs) were down 1.6% in the quarter compared with the prior year.
Lager volumes in Africa grew by 11%, despite cycling strong comparatives (third quarter volumes grew by 12% last year) and capacity constraints in a number of markets. In Tanzania lager volumes grew by 13% driven by both solid growth in premium brands and the strengthening of mainstream brands due to expanded and intensified sales and distribution. Continued extension of market penetration grew lager volumes in Uganda, up 17%. In Zambia lager volumes increased 16% underpinned by robust growth of our mainstream portfolio against a backdrop of strong economic conditions. Lager volumes in Mozambique grew by 8% benefiting from the launch of the Impala brand, a cassava based beer, and strong growth in the north of the country. In Zimbabwe our associate delivered lager volume growth of 19% supported by further improved product availability. Our associate Castel grew lager volumes by 9% with a strong performance in Cameroon and the Democratic Republic of Congo. Soft drinks volumes grew by 9% driven by solid performances from South Sudan, Ghana, Zimbabwe, and from our associate Castel.
In Asia Pacific lager volumes grew by 7% on an organic basis. Volumes in China grew 5%, despite cycling a strong comparative period. Including the impact of regional acquisitions, China's volumes were up 11%. In India volumes were up 21% benefitting from the lifting of trading restrictions in Andhra Pradesh, which had constrained volumes in the same quarter of the prior year, as well as good growth in the focus states of Karnataka and Haryana.
On 16 December 2011, the group completed the acquisition of Foster's in Australia for a total cash consideration of approximately A$10,483 million (approximately US$10,465 million), and the Asia segment was renamed the Asia Pacific segment. Volumes for Foster's are not included in third quarter group or divisional results. On a pro forma basis, Foster's volumes for the quarter ended 31 December 2011 were 6% below the same period in the prior year. The beer category overall is estimated to have declined at a slightly slower rate in the quarter.
In South Africa, in a challenging economic environment, lager volumes grew 2%. Growth was driven largely by momentum from our core power brands, particularly Castle Lite and Castle Lager, as we continued to make targeted investments in our portfolio and focused on improving retail execution and customer service. Soft drinks volumes increased 1% despite tough trading conditions and cycling strong growth of 9% in the comparative quarter. The performance was buoyed by growth in two litre PET and immediate consumption packs.
On 19 October 2011, the group announced its intention to form a strategic alliance with Anadolu Efes. The group intends to transfer its Russian and Ukrainian beer business to Anadolu Efes, and to take a 24% equity stake in the enlarged group, which will be the vehicle for both groups' investments in Turkey, Russia, the CIS, Central Asia and the Middle East. The alliance will result in the enlarged Anadolu Efes strengthening its market position to become the number two brewer, in value terms, in the large Russian beer market. It is already the leading beverage producer in Turkey, with 89% of the beer market and a 69% share of the carbonated soft drinks market, and it has leading market positions in the growth beer markets of Kazakhstan, Moldova and Georgia. Subject to finalisation of the definitive legal agreements and relevant regulatory approvals, the group expects to complete the transaction before the end of the financial year ending 31 March 2012.
On 4 November 2011, East African Breweries Limited launched a public offer through the Dar-es-Salaam Stock Exchange for the sale of its 20% interest in Tanzania Breweries Ltd, the group's subsidiary in Tanzania. The offer closed on 25 November 2011. SABMiller Africa BV applied for all of the shares offered, but the offer was substantially oversubscribed, and after priority allocations were made to applicants who were Tanzanian residents or East African residents in accordance with local securities laws, SABMiller Africa BV was allocated shares representing an additional 4.72% of Tanzania Breweries Limited, increasing its interest to 58% (36% group effective economic interest).
On 25 November 2011 SABMiller Africa BV disposed of its 20% interest (12% group effective economic interest) in its associate Kenya Breweries Limited to East African Breweries Limited for cash consideration of US$205 million.
During November and December 2011 two of SABMiller's African subsidiaries, Zambian Breweries plc in Zambia and Nile Breweries Ltd in Uganda, launched rights issues to raise approximately US$70 million each, and in January 2012 the group's subsidiary in Mozambique, Cervejas de Mo?ambique SARL, launched a rights issue to raise approximately US$40 million, in each case primarily to fund recently announced capacity expansions. The rights issues in Uganda and Mozambique remain open, and, following closing of the rights issue in Zambia, SABMiller Africa BV's interest remains unchanged at 87% (group effective economic interest unchanged at 54%).
With effect from 1 January 2012, the group and Castel implemented a number of organisation changes in their African operations as part of their strategic alliance agreement. The changes involve the combination of the operational management of the Castel and SABMiller businesses in Nigeria and Angola, with the Nigerian businesses being managed in future by SABMiller, and the Angolan businesses being managed by Castel.
On 13 January 2012, the group completed the acquisition from Coca-Cola Amatil Limited (CCA) of CCA's 50% interest in the group's Australian joint venture, Pacific Beverages (Pte) Limited, for cash consideration of A$326 million. Pacific Beverages is now a wholly owned subsidiary of SABMiller.
On 17 January 2012, the group successfully completed a US$7,000 million bond issue in four tranches: US$1,000 million 1.85% notes due 2015, US$2,000 million 2.45% notes due 2017, US$2,500 million 3.75% notes due 2022 and US$1,500 million 4.95% notes due 2042. The net proceeds were used to repay in part the bank borrowing incurred to finance the acquisition of Foster's.
In December 2011 the group announced the appointment of Ari Mervis (who had been Managing Director, SABMiller Asia since 2007) as Managing Director, SABMiller Asia Pacific and Chief Executive Officer of Foster's, with effect from 16 December 2011. The group also announced the appointment of Harald Harvey as Managing Director Asia, with effect from 1 February 2012. Harald will report to Ari Mervis and will oversee SABMiller's businesses in India and Vietnam, and its ongoing regional business development and export operations, as well as providing support to CR Snow.
23 Янв. 2012