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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.

Norway sheds light on ‘dark’ – ad-free – beer marketing

Anders Roed is in a difficult position for a marketing manager: He is not allowed to advertise on television, in newspapers or on the Internet. Yet the head of marketing at Ringnes in Norway has seen a succession of foreign visitors recently keen to gain insights from him.

That is because as Norway’s biggest beer producer, Ringnes has great experience of operating in a “dark market” – a situation where little or no advertising is allowed. The visiting executives have come from the Carlsberg Group, Ringnes’s owner, which is about to see Russia, representing about 40 per cent of group sales, plunged into a dark market.

“We have had a few people coming to Norway to see how it works in a real dark market,” he says in his office in Oslo.

His message is a reassuring one to the worried executives: A dark market is good for dominant players. “If you have a strong portfolio it is difficult to attack you,” he says. “Launching something totally new with just the product itself and not being able to tell any kind of story is very difficult.”

For Carlsberg, the leading beer brand in Russia with nearly 40 per cent market share, that is welcome news. Russia was meant to be the promised land for the Danish brewer, which in recent years has taken full ownership of Baltika, a St. Petersburg-based company that is Europe’s leading beer brand.

But regulations designed to crack down on excessive and underage drinking, combined with the financial crisis and poor barley harvests, caused Carlsberg’s sales, profits and market share to tumble in the country and investors to query its strategy of concentrating so heavily on Russia.

The marketing ban – TV and Internet advertisements have been outlawed since the summer, and print advertising will be illegal from Jan. 1 – represents a second wave of regulatory tightening.

But using some of the tools developed in Norway, Carlsberg has fought back to record three consecutive quarters of increasing market share.

“I am very pleased with the trends we have been seeing in Russia. We did a lot of work to change the business model and it is good to see that we are getting the benefit from it,” says Jorgen Buhl Rasmussen, Carlsberg’s chief executive.

Carlsberg’s market share, which slipped from about 40 per cent in 2010 to 37 per cent at the end of 2011, was 38.9 per cent in the third quarter.

Its three biggest competitors in Russia – SABMiller PLC, Anheuser-Busch InBev SA and Heineken NV – each have about 15 per cent of the market and will be similarly affected by the ban.

The most important area Mr Roed points to is design. “We spend quite some time and quite some resources on developing the perfect packaging and the perfect design for these products,” he says. “It is the one lever we have. But in my opinion it is the most important in any fast-moving consumer goods [market]. People tend to give TV commercials and advertising too much weight.”

So in Norway the recent launch of a one-litre can for Ringnes proved to be a big success, and Mr Roed places a lot of attention on what is written on the front and back labels. Similarly in Russia, Carlsberg has benefited from introducing products such as 2.5 litre plastic bottles and multipacks. New product launches accounted for 15 per cent of its Russian volumes in the year to July.

Mr Buhl Rasmussen points to the introduction of Holsten, one of its many brands, in Russia shortly before the ban takes effect. “It is important to establish products before the ban … I always prefer not to have an advertising ban. But if it happens we normally see the leader, the best known, benefit more than the complete unknowns.”

Denis Sherstennikov, head of marketing for Baltika, highlights several things the brewer has done. It has introduced new designs for beer fridges in shops with special sections for new products, and has relaunched Tuborg successfully. Baltika was also able to conduct limited marketing, such as its sponsorship of the 2014 Winter Olympics in Sochi.

Carlsberg still faces big questions in Russia. Besides the advertising ban, tax increases will raise the price of beer and questions remain about its dependence on a single market. But Mr R?ed at least has good news about the financial aspects of being in a dark market.

“Norway is still a profitable market. It hasn’t been destroyed by promotions,” he says. “The margins in this market are much better than they are in other markets having a much more liberal policy.”

8 Янв. 2013



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