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Russia: Positions of Brewing Companies

The 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 brands

In 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 2019

During 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.

US cider market set to ‘explode’ – C&C Group

C&C Group says it expects the US cider market to explode, but aims to build a strong multi-beverage business group rather than just a ‘pure play’ cider business.

Shore Capital analyst Phil Carroll, in a note on a C&C investor day held in the UK, wrote that CEO Stephen Glancey and finance director Kenny Neison had spent four years stabilizing the plc. (key cider brands Bulmers, Magners) and were now moving on to the ‘transform’ phase.

Praising C&C’s “high quality” management team, Carroll calculated that the company had further acquisitive firepower – namely a war chest of over €100m ($130m) based on a balance sheet leverage level (debt ratio relative to total assets) of 1.5x that has the potential to rise to 2.5x.

Consolidation…then transformation

“Arguably, there is already clear evidence of the commencement of this stage with the recent acquisitions (subject to competition authorities’ approval) of the [craft-based] Vermont Hard Cider Company (VHCC) and the Gleeson Group,” Carroll wrote.

Shore Capital said that C&C had a significant international opportunity, especially for its cider business, but added that Tennent’s beer also had strong potential as an export brand, and was already sold abroad in Italy, Spain, Ukraine, Canada and the US.

Specifically in the US, C&C management said that its US acquisitions provided access to a market that was about to ‘explode’, a trend the Shore Capital analyst agreed with.

“This looks to be confirmed, in our view, by the recent market data showing cider volumes up 57% in the past six months and more recently up 81% in the past month,” Carroll said.

Cannibalization ‘should’ be limited

Although cider only account for around 0.3% of the long alcoholic drinks market in the US, growth to 1% in the next five years would imply category CAGR of 36%, while a 3% share would imply 78%.

“Cider falls into the craft beer category where it is currently circa. 7% of the total US beer market. Data shows that in areas such as Seattle and Washington, craft beer accounts for circa. 20% of the market, so again, the potential for category growth looks very promising,” Carroll said.

“Furthermore, we also note that, generally, imported cider and domestic cider do not compete for the same customer, which should limit any cannibalization impact on C&C’s total US sales.”

C&C could also use VHCC to distribute Magners in the States, the analyst said, noting that the underlying valuation of VHCC did not account for the potential for filling the gap left by the end of a deal (in mid-August) whereby the firm distributed Heineken USA cider brand Strongbow.

“Profits from the international business are expected by C&C’s management to account for circa. 20% of group profits by the year end to February 2016,” the analysts said.

4 Дек. 2012



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