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. ...
SA. SABMiller interims: Jamie Wilson (SABMiller) & Chris Gilmour (Absa Investments)
HILTON TARRANT: In the six months between April and September South African Breweries sold 1.25bn litres of beer in SA. My maths is slightly rusty, but it works out to 7m litres of beer a day, the equivalent of 20m cans of beer a day in this country. Its parent, SABMiller, the world’s second-largest brewer, today said global revenue grew by 11% in its six months to $17.5bn. Rand-adjusted earnings per share up 32% on the back of a weaker rand. Organic lager volumes, the all important number, up just short of 4%.
Chief financial officer Jamie Wilson joins us from London. Jamie, a very strong performance across the group, boosted particularly by the acquisition of Australia’s Foster’s.
JAMIE WILSON: Yes, exactly. I think it's very encouraging, the performance of all our existing businesses, but you are right, the Foster’s side on top of that gave us very strong growth and we got down to an adjusted earnings per share growth of 14%, which is in the current climate very good.
HILTON TARRANT: Are you surprised by the performance of Foster’s, given that this is not even one year into that acquisition?
JAMIE WILSON: No particularly. As we said, it's early days in the Foster’s integration into our business. We took over a company that we felt had been undermanaged for some time, and it would take us some time to get just the business back on an even footing, the combination of rebuilding the brand portfolio and getting the operational expertise back into the business. But so far that part of the business is going well. It will take us a little while just to get the brands back into consumers’ hearts and minds, but that's pretty much as we expected.
HILTON TARRANT: Jamie, the real focus across your group is strengthening those core brands. Just looking at how your peer, Anheuser-Busch InBev, tackled this, they seem to have the single global megabrands, these kind of five or six brands that they spread across the world, versus an SABMiller which seems to be focusing on very, very strong regionalised brands. Is that a fair comparison?
JAMIE WILSON: Yes, it is. We've built our business on local brands and local consumers and that’s the model that we follow in pretty much every part of the world. We do have global brands such as Azzuro, Miller Genuine Draft and Grolsch, but we focus particularly on growing a lot of local brands as well. Some of them, as you so rightly say, go across different regions. But that’s just our business model and it works well in the emerging markets that we operate in.
HILTON TARRANT: Here in South Africa you won back market share, especially in the premium space. What sort of percentage have you managed to win back over the past year?
JAMIE WILSON: Well, I think what you’ve seen is a steady flowing back of market share. We are sitting at just over 90% in the market now, so we're pretty pleased with that performance. You are right, the premium space is doing well with Castle Lite. But equally well the whole portfolio has been moving forward.
HILTON TARRANT: Castle Lite is doing particularly well across the continent and in South Africa as well. Take us through the strategy there. Is this really a story of getting a premium product into other African markets?
JAMIE WILSON: Very much so. I think as the African markets evolve and mature in their economies and you get an emerging middle class there looking for more choice, and to trade up into different brands, Castle Lite is a great brand to be able to offer them in their local markets. And we are seeing about a 50% growth in that brand across the African continent in the six months, which has been terrific.
HILTON TARRANT: Jamie, Just to close off with, craft beer seems to be the new trend in the kind of brewing space. It really has sort of taken off over the past couple of years and I do note that you have made mention of craft beer, especially in the US operations. It's obviously at tiny volumes that those craft brewers do come through. Have you noticed much from that space across your businesses?
JAMIE WILSON: Yes. The craft beer has been an evolving phenomenon in the US and we have set up our own company, Tenth & Blake in the US which plays in that space, and we brew brands like Blue Moon, Leinenkugel’s and we've actually been gaining share in that space in the US. It's an interesting space; it's offering the consumer quite a lot of different choices and different flavours and obviously gives a bit more interesting in craft categories. So it's quite a healthy space in the US.
HILTON TARRANT: Jamie Wilson. Let’s bring in Chris Gilmour now, analyst at Absa Investments. Chris, SABMiller obviously beating estimates, given how the market reacted to the results today.
CHRIS GILMOUR: I’d say! And you’ve now got a company that’s the second-biggest market cap on the JSE. It's getting off at twice the size of Anglos these days in terms of its total market cap. So ja, this has been a phenomenal performance this year. And it all comes down to the earnings.
As Jamie says, you’ve got the diversified base now. If one area isn't performing quite as well as another area, there are other areas that are coming in and taking its place. It's a tremendous success story.
HILTON TARRANT: The market share here in South Africa back at 90%, obviously facing some significant onslaught from brandhouse with the Amstel rights. We saw the big entrance of Windhoek as well as Heineken really denting market share in the premium side of things. Seemingly that’s behind it now.
JAMIE WILSON: It's all been put to rest a long time ago. I went on a site visit about 18 months ago and even then you could see that things were changing quite dramatically.
To put this is some sort of perspective, when Amstel was taken away from SAB in March 2007 they had a 9.1% share of the total beer market. Today it's about 4%, 4.5%. So it's halved. Castle Lite – you were talking about that earlier, that has been one of the main drivers. The other one has been of course the fact that you’ve got things like Carling Black Label and drafts. They’ve been pushing so many areas of product in there and it's been killing Amstel.
HILTON TARRANT: And this craft beer trend is pretty interesting given that SAB – you are finding this brewing giant moving into that space in the US and possibly no doubt looking down the line to enter more maturing beer markets along a similar vein.
CHRIS GILMOUR: Oh, absolutely. Malcolm Wyman, the former financial controller at SAB, said to me many years ago anything that promotes interest in beer is something that SAB would look at. And that’s along those lines. You go along and you promote interest in the craft beer, in the small brewers, anything that gets people interested in coming and drinking beer who have formerly not been drinking it, there’s going to be a spinoff into mainstream or premium or whatever. Oh, absolutely.
HILTON TARRANT: Chris Gilmour.
David, have you tried this Blue Moon?
DAVID SHAPIRO: You don’t drink Castle Lite, do you?
HILTON TARRANT: I do.
DAVID SHAPIRO: No, you don’t.
HILTON TARRANT: I do, seriously. I switched to Castle Lite about six months ago.
DAVID SHAPIRO: No-one drinks Castle Lite [laughs].
HILTON TARRANT: Have you been to a pub lately? Castle Lite outsells all other draft beer.
DAVID SHAPIRO: That’s awful! I've drunk Blue Moon.
HILTON TARRANT: Blue Moon’s a very good beer.
DAVID SHAPIRO: I like craft beers and when you are really in a beer-drinking mood you can go to some of the Belgium beers which are similar, like that. But Castle Lite!
23 Ноя. 2012