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3-2019

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.

Heineken, Carlsberg ratings will survive French beer tax: Moody’s Investment Service

Moody’s says it will not downgrade its ratings of Carlsberg and Heineken, despite the potential harm a massive French tax increase in January could pose to national beer sales.

On December 13, the French Constitutional Court (Conseil Constitutionnel) rubber-stamped government plans to raise beer excise duty by 160% from January 1, senior analyst at Moody’s Investor’s Service, Yasmina Serghini-Douvin, noted in a sector comment.
As of January 2013, the standard excise duty rate for beer in France will jump 160% to €7.2 ($9.56) per hectoliter/degree of alcohol of finished product (from €2.75 in 2012) for breweries with a yearly production exceeding 200,000 hectoliters. Serghini-Douvin wrote.
“French market leader Heineken, with an estimated market share (in volume) of approximately 32.4% and Carlsberg Breweries, with 29.1%, are likely to bear the brunt of the proposed tax hike,” she added.

Operational weakness risk
But the analyst said that the French tax hike would not affect Moody’s ratings for the brewing giants – Heineken: Baa1, Carlsberg: Baa2 – because they continued to focus on generating cash flow and diversification.
Heineken’s recent acquisition of Asia Pacific Beverages (APB), in particular, would reduce its Western European net sales exposure from 45% to 41%, Serghini-Douvin observed
That said, she warned that Heineken’s credit metrics would deviate from targets set out for the Baa1 rating category: debt/EBITSA of below 3.0x and retained cash flow (RCF)/net debt in the low to mid-20s in percentage terms.
Similarly, Carlsberg’s credit metrics had deteriorated since 2011 driven by weak performance in Eastern Europe, the analyst said; the firm had RCF/net debt of 23.3% in 2011, while debt/EBITDA was 3.1x “above level deemed appropriate for its rating category”.
“The above metrics leave these companies in a somewhat more vulnerable position to cope with operational weakness,” Serghini-Douvin said,  “driven by a challenging macroeconomic and fiscal climate across Europe and an uncertain input cost environment.

Retail price hikes of 15-20%
The analyst said that, as a result of the tax increase, Moody’s expected beer sold in supermarkets (the bulk of volumes sold in France) to see much steeper price rises than drinks sold via on-premise channels, because beer duty was based on volumes, not prices.
Moody’s expected Brewers to pass on the higher tax to consumers, Serghini-Douvin said, with Carlsberg and Heineken estimating price increases of 15% to 20%. the analyst wrote.
The threat to beer volumes was compounded by French plans to raise standard VAT to 20% from 19.6% and its reduced rate (in restaurants, for instance) from 7% to 10%, she added.
Worse still, beer volumes in France had fallen in recent years, Moody’s noted, prompting Heineken to focus on its premium portfolio (including its eponymous brand) and push brands such as Desperados and Pelforth in the on trade.

Kronenbourg losing ground
The premium category gained share in recent years as a result, Moody’s said, while Carlsberg also reported market share improvements in 2011, particularly in the on-trade channel.
“However, the company has suffered from the steady decline in the mainstream category where its popular Kronenbourg brand has been losing ground. To boost market share and growth, Carlsberg announced restructuring efforts in the country.”
Beer taxes had risen across Europe in recent years as governments tried to curb national deficits, Moody’s said, with Holland’s recent hike, and measures planned in Italy and Finland.
“Overall, we believe that brewers most exposed to Europe will continue their cost-cutting efforts in order to preserve their margins in the region in 2013,” Serghini-Douvin wrote.
“However, we remain concerned that cost-cutting might not prove sufficient to mitigate weak demand in light of largely unfavorable trading conditions across most European countries, driven by austerity measures, higher taxes and still high unemployment rates.”

20 Дек. 2012

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