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. ...
Uganda. Beer sector leaps in profits as economy soldiers on
NBL: Over 100 billion in 2011 in VAT and Excise Duty
UBL: Over 80.8 billion in 2011 in VAT and Excise Duty
Uganda’s one of the biggest five beer consumers in Africa with a consumption capacity of 8 liters/individual/annum
• Czech Republic—135 liters: biggest beer consumer in the world
• South Africa—60 liters: biggest beer consumer in Africa
• Uganda—8 liters per annum: among the top 5 biggest beer consumers in Africa. (South Africa, Gabon, Namibia, Uganda and Kenya)
Commercial Beer Production Capacity
• NBL (Jinja Plant)-1.8 million hectoliters per year
• UBL (Port Bell Plant) -1 million hectoliters per year, expected to increase by 50 percent to 1.5 million hectoliters before the end of this year.
• Parambot (Gayaza Plant)-0.1 millionhectoliters
Despite their shrinking spending power, Ugandans are consuming large volumes of beer. This is backed by the 36 per cent growth in profits that players in the beer sector have registered in the past year.
Statistics on beer consumption for the financial period ended December 31 2011 alone show that commercial beer consumption in Uganda grew by more than 28 per cent throughout the 12 months, a trend which is expected to continue in the coming years as there are still unexploited opportunities in the local beer market, even with the consumption of commercial beer compared to locally brewed alcohol is still very low.
Both the World Health Organisation (WHO) and Canadean; an international beverage information specialist ranks Uganda among the countries with the largest frequent beer drinkers in Africa.
Reports from WHO for example, rank Uganda as one of the highest consumer of beer in Africa with an average consumption of eight litres per annum. However, it’s important to note that commercial beer consumption only accounts for 5 per cent of the total alcohol consumption for Uganda. This is still very low compared to the 94 per cent informal alcohol (locally brewed) consumption in Uganda.
The growth of beer consumption is boosted by a string of factors that include; GDP growth, rapidly growing population, laissez-faire government policies on beer, aggressive marketing and improvements in the quality and appearance of beer brands.
In an interview with Prosper, Mr Nick Jenkinson, the managing director of Nile Breweries Limited (NBL), a subsidiary of SABMiller Group, majorly attributes the positive outlook of the sector to the fast growing population and GDP growth in Uganda.
“Uganda is indeed a viable market for beer in Africa. The consumption of commercial beer has greatly improved in the past years. GDP growth and a rapidly increasing population are driving consumers to trade up from cheap informal alcohol to more expensive commercial branded alcohol,” Mr Jenkinson said, adding: “This trend is likely to continue for the foreseeable future while the economy expands and consumers become more affluent. The western region is the fastest growing beer market with about 25 per cent growth.”
Contrary to this, in an interview, Mr Oscar Kintu, a distributor of beer in the southern region, related the current beer consumption to hard economic times that leave Ugandans with fewer alternatives apart from drinking in order to manage stress.
“Several people are drinking beer but not because they have free money to spend. Many are in bars because the situation has dictated. With this endless load shedding and growing unemployment, people are forced to be in bars during both day and night. Because of this idealness, more beer bottles are sipped and this is reflected in the growth figures. It does not necessarily mean that people have money as they are spending the very little they earn on beer.”
The beer sector has three main players. These are Jinja based NBL, Uganda Breweries Limited(UBL), a subsidiary of East African Breweries Limited based at Port Bell and Parambot Breweries, manufacturers of Moonberg lager based in Gayaza.
As of the end of 2011, NBL announced that it had acquired a slightly higher stake on the Ugandan market, overriding UBL that had dominated this sector for quite a while.
“I will not give specific figures but by the end of 2011, we were the market leaders in this sector. Our production and revenue figures reflect this. We even hope to do much better this year,” Mr Nick Jenkinson, NBL managing director said.
To this, Mr Alasdair Musselwhite, the managing director of UBL said; “The sector is very volatile and market situations change very swiftly. They can be leading today and in the next couple of months we are in the lead again. We need to see their source of information. But then UBL posted very good results in the last quarter. This shows that we too are doing well.”
Today, both NBL and UBL are involved in active battles over control of the local beer market with each of them investing massively in increasing production capacity and streamlining distribution lines.
NBL currently operates one brewery in Jinja, which was originally completed in 1956, and underwent a USD 29 million expansion in 2009. This doubled its production capacity from 0.9 million hectoliters to 1.8 hectoliters annually.
However early this year, NBL, commissioned the construction of a new $80 million (Shs190 billion) plant in Mbarara, which is expected to begin producing by mid-2013 with a starting production capacity of 0. 65 million hectoliters of beer per year.
According to Mr James Mulwana, the chairman of NBL, the construction of a plant in Mbarara is in direct response to the high beer demand that in a few years will no longer be manageable with only the Jinja Plant.
On the other hand, UBL, has also already increased its production capacity at the Luzira based Port Bell Brewery from 0.75 million hectoliters per annum to 1 million hectoliters per annum, plus revamping its bottling section to meet the market demands. The Port Bell brewery is currently undergoing renovation to increase its production capacity to 1.5 million hectoliters before the end of 2012.
Uganda records highest beer consumption regionally
The recently read EABL half-year results for the period up to December 31 2011 show that the Uganda section had the highest growth in beer consumption with top-line revenue growth of 43 per cent.
While speaking to Prosper, Mr Alasdair Musselwhite, the managing director of UBL, said; “With the big market available reflected by our high turnover, we are now concentrating on capacity expansion in order to meet demand. Our investments in capacity expansion will allow us to fully utilise local grain content, increase our brewing capacity and ultimately enable us build sufficient capacity to fully satisfy the needs of our ever growing customers,” Mr Alasdair said.
In a separate interview, Mr Tom Burunguriza, the acting executive director of Uganda Investment Authority, said the continued investments by these companies is good for both revenue generation and employment creation.
“These companies give strong support to our economy. The more they invest, the more the economy benefits. Minus them contributing direct revenue, through their old and new investments they continue to employ more people from within us.”
Parambot Breweries; the local manufacturers of Moonberg Lager are the other player in the sector. Their contribution to the sector is minimal but growing with more presence in urban areas. Last year, they put on the market about 0.1 million hectoliters of beer.
By the end of 2011, more than 70 per cent of the resources used to manufacture beer by these companies were got from Ugandan soils. These include water, cereals; sorghum, millet, and barleys among others.
Globally, average beer consumption stands at about 27 litres with Czech Republic as the highest beer consumer in the world with a consumption level of 135 litres per annum.
In Africa, South Africa is the biggest beer consumer at an average of 60 litres/individual/annum. This is followed by Gabon, Namibia, Kenya, and Uganda at 8 litres/annum.
7 Мар. 2012