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. ...
The global outlooks of the legal market of cannabis are excellent. It is possible to simultaneously imagine dry law repeal and craft brewing boom but not in one but in several consumer categories. For alcohol is contained in liquids and cannabis derivatives can be in three physical forms.The value of legal market of cannabis and its products can reach 10% of the world beer market in five years, and in 2030-2040 even reach the same scope provided the current rates of legalization and development of market infrastructure remain at the same level. Cannabinoids are actively integrating into the food industry from chewing gum to beverages deforming the pharmaceutical and alcohol markets, they influence the trends of healthy lifestyle and beauty. ...
Beer keg market
Beer keg market
In general the world market of kegs is currently experiencing a decline caused by unfavorable sales dynamics of draft beer in strategic regions. Striving to keep their sales volumes the leading producers refocus the trade on the USA. The price policy in the market of steel kegs is so far comparatively stable. Three leading companies similar in the high quality of their production and product range set the style. The potential of the draft beer market as well as the keg market in Russia is still significant, but its realization is heavily dependent on economy and state regulation of the branch.
The employment of steel kegs for storage and shipment of beer is undoubtedly considered to be the most appropriate, cost-effective and reliable for fermented beverages. Kegs can be regarded as a guarantee of preserving the original taste and organoleptic characteristics of beer.
Using steel barrels for storage and transportation of beer has a number of advantages. The material (namely food-grade steel), and its hermetic impermeability allow kegs to block the access of gases and ultraviolet rays to beer. This protection provides the best way to maintain the quality of beer with optimal hygienic conditions throughout the entire supply chain. This is especially important for manufacturers of real ale in England or "live" beer in Eastern Europe.
The design eliminates the possibility of falsification at the point of sales, in particular topping. This kind of packaging is also relatively easy to use in the production of any scale (except for the purification step).
The first keg (Swedish "kagg", a barrel) was introduced in 1929. It was invented by the German company Krupp. Its improvement in the 1950s by couplers and fittings provided tightness of filling, which in turn ensured the quality of storage. As from the date of introduction, steel barrels quickly displaced their wooden ancestors and until now continue to dominate the on-trade market.
The use of modern technology provided high uniformity and smoothness of the welds, which greatly improved sanitary condition of kegs. Operational built-in fitting piece closes a keg, allowing to maintain high microbiological safety within the metal container.
In terms of transportation kegs have optimal balance of weight and capacity, while being not as light as aluminum can and PET bottle, it excels them at reliability. As long as service norms are observed, kegs have high durability (about 200 applications for 30 years) and reliability, withstanding to 25-fold operating pressure. The remarkable thing is that modern kegs made of stainless steel meet the highest safety standards as for an increased initial pressure and saturation pressure, an increase in the temperature of internal pressure, an increase in pressure if mishandled (e.g., when falling down), as well as in irregular supply of carbon dioxide. Reliability of kegs is increased by a safety valve that relieves pressure when it reaches 45 bar.
It is relatively easy to restore and repair a keg, which significantly increases the period of their operation. On the other hand, restoration of a keg is quite a profitable business that has enabled many service companies to find their place in the market.
Finally, a steel keg is a fully recyclable product and the resulting stainless steel can be reused in production. Modification of current kegs (e.g., reduction of volume) allows to start a new life cycle of containers as a more compact package.
Along with numerous advantages, it is important to note that the employment of steel kegs in beer industry is yet attended by some difficulties and problems. First of all, launching of beer filling business requires large investment costs for the purchase of kegs and technology to fill them. In future utilization of kegs implies constant expenses on maintenance, repair and cleaning.
Kegs are returnable packaging, which is also associated with a lot of peculiarities. The growth of export in Western Europe conditions an increase in capital costs per one liter of beer. The growing length of routes involves a decrease in package trip rate. Return of a keg in a year or even more is currently considered to be quite frequent. In addition, demands of the market are changing in the direction of reducing the volume of barrels. As a result, companies bear the high costs of transportation of empty returnable kegs, facing the necessity to solve a number of potential administrative problems associated with returnable containers.
The problem of container turnover terms becomes particularly critical during peak season sales.
It is noteworthy that the cold season is also characterized by its own peculiarities associated with timely filling of kegs in case of freezing of remaining content.
Frequent loss of kegs is one of the persistent problems for brewers. High cost of stainless steel makes kegs to be a valuable source of illegal income. Stolen kegs can end up on the secondary market of containers or simply be sold as scraped metal.
Kegs with a capacity of 20 and 30 l. are currently in the greatest demand in European market, displacing 50 liter kegs. This trend is, on the one hand, associated with diversification of beer brands. On the other hand, maintenance of heavy kegs runs counter to social policies of some European countries. For instance, Italian government issued a law prohibiting employees to lift items weighing more than 25 kg. Thus, there is an increase in capital cost per package of one liter of beer.
Besides, there are kegs of 5, 10, 15, 25, 40, 45 and 100 l. on the market.
Overall, European market involves three main types of kegs: DIN - tall and narrow kegs, Euro - low and wide kegs and their modification Plus-keg - steel kegs with a special polyurethane coating, acting as a type of thermostat, as well as protecting the keg from the strain upon impact.
In American market the capacity of a keg is measured not in metric system but in the standard beer barrels of the USA. Most common are kegs of 1/2 barrel (58.66 l.) and kegs with the capacity of 1/4 barrel (29.3 l.)in two variations, namely Quarter Slim and Pony Keg (like forms DIN and Euro).
Home and craft brewers in the USA often use long slim kegs with a capacity of 1/6 barrel and Cornelius kegs of 5 gallons.
In Great Britain and the USA the growing popularity of beer with secondary cask fermentation (real ale) promoted the sales of steel barrels (caks) of various capacity that differ substantially from common kegs by the structure.
In addition, there are such common kinds of design as Finn-keg and Eco-keg. Finn-keg and Eco-keg are kegs with casing made of stainless steel and two shells (top and bottom) of high-impact polyethylene or polypropylene. These shells can be removed or replaced quickly, which is very convenient, because the use of kegs on automatic filling lines with a deformed or broken lower sidewall becomes almost impossible. Removable shells can be of different colors with various logos. Metal cost avoidance makes these kegs more affordable. There are also Fresh-kegs (kegs with integrated filling system for home parties) and other types.
Disposable plastic packaging is in demand for breweries with high export orientation, which number becomes progressively high. Domestic market stagnation makes European brewers search for new trade areas. When using common kegs, increasing length of routes implies a decrease in container trip rate along with an increase in the cost per liter of beer.
In the family of various plastic containers there appeared several new members in the past years.
In particular disposable KeyKeg with Bag-in-Ball technology is gaining popularity. They are very lightweight which allows to increase the quantity of transport loading. They remove the problem of returnable package, storage, restoration and cleaning.
Several years ago British company Petainer in cooperation with KHS launched lightweight disposable PET kegs as an alternative to steel disposable kegs. Such barrels are available in volumes of 15, 20 and 30 l. and are transported in a separate package, such as special cardboard boxes. After using PET kegs can be sent for recycling. The main advantages of disposable kegs, according to manufacturers, include their lightness, cost-efficiency, the use of special integrated additives as part of PET for absorption of oxygen, as well as for improvement of other characteristics of large packages (pressure stability, microbiological purity of empty kegs).
Leaders in keg production
Leading manufacturers of kegs on the world market are represented by European companies with combined share in total production of kegs comprising 75-80%*. These are German companies Schafer, Blefa (a division of Franke) and Thilmann Portinox.
* Excluding Southeast Asia
Thilmann Portinox is the first in the world ranking according to aggregate estimate of manufacturers, while Schafer ranks the second and Franke Blefa is the third. Each year the leaders try to modernize production and provide innovations. At the same time, as noted by the manufacturers themselves, there are no significant differences in production technology and quality of the material, so we can say that the quality of products, manufactured by the leading trio, is at the same high level. Supply chain of the listed companies covers the whole world.
Portinox was founded in 1965 in Spain. In 1978 the company became part of Teka Group, the world's leading manufacturer of stainless steel products. Portinox is currently heading the division of Thielmann Container Systems for production of containers. Within this framework, the company manufactures products at 7 plants located all over the world (the largest plant is in Spain, 3 plants are in Germany and one each in Belgium, Mexico and the United Kingdom). The total production capacity is more than 2.5 million of kegs per year.
The range of steel beer kegs includes DIN Keg (20-50 l), Euro Keg (20-50 l), US Keg (1/6 - 1/2 of a barrel), Slim Keg (10-30 l), RSR Keg with rubber shells (10-30 l), Bunghole Keg with a built-in valve for filling.
Schafer was founded in 1937 in Germany. The company produces a wide range of stainless steel products: furniture, office supplies, waste containers, wheel rims and other. Steel kegs are manufactured at two plants in Germany and the Czech Republic. The Czech enterprise became part of the company in 1995.
Product line of beer kegs consists of DIN Keg, Euro Keg (20-50 l), US Keg (1/6 - 1/2 of a barrel), Slimline Keg (10-25 l), Eco Keg with polypropylene shells (5.2- 58.67 l), Plus Keg and Junior Plus Keg in polyurethane protective case (10.4 - 50 l), Fresh Keg with integrated CO2 supply and a dispensing head "for parties" (5-15 l), smart Draft, a double-chamber keg with integrated supply CO2, used in combination with special desk-top smart coolers (10 l).
Franke Blefa traces its history back to 1896, manufacturing a wide range of steel products: kitchen furniture, engineering equipment, etc. Keg manufacture was launched in 1968 and steel barrels are currently manufactured at two plants in Germany and the United States. In 2006, the company purchased the operating keg production in the USA from Spartanburg Stainless Products and moved all the equipment to its plant in Louisiana. However some time later that production was stopped.
The range of Franke Blefa beer kegs includes DIN Keg (20-50 l), Euro Keg (20-50 l), US Keg (1/6 - 1/2 of a barrel), Slim Keg (10-30 l), Finn Keg with polyethylene shells (15-30 l), RSR Keg with rubber shells (10, 20 l), steel Party Keg for parties with a tap for pouring (10-30 l), lightweight Opti Keg with rubber shells (10 and 20 l).
Finland, Italy and Germany are the main suppliers of stainless steel for the production of barrels. Special mention should go to German companies DSI and Micromatic as component suppliers.
Manufacturing of kegs is also getting into a full swing in China. The best known large Asian companies include two major manufacturers, Harbin Hande Light Industrial & Pharmaceutical Equipment and Guangzhouheshun Machinery Hardware. The USA and Asian countries are considered to be the key market for Chinese manufacturers.
It is worth noting that it is becoming increasingly difficult for Asian products to compete with the Europeans in price, as the rise in prices for stainless steel, which lasted until recently, neutralized the benefit of cheap labor.And the labor force in Chinese market is growing less cheap.
Company Greemacher, that was producing kegs in China starting from 2007, decided to launch production in the USA too. Since 2014, a plant in Pottstown, Pensilvania has been the only national keg producer. According to the production manager of Geemacher, they do not stop Chinese supplies and started the new plant not for reasons of economy. The thing is many of their clients are willing to pay a little more for kegs made in the USA.
World draft beer market
The level of demand for kegs is mainly dependent 1) on the consumption dynamics of draft beer via HoReCa channels in the countries of Western Europe, 2) on the development of specialized beer retail in Eastern Europe, 3) on the growth of the craft beer market in the USA.
Let us consider the dynamics of beer sales on-trade in separate regions for some years past.
Southeast Asia in 2014 in general fell short of expectations. The world biggest Chinese market fell by …% to … mln hl. for the first time in many years. The decline in 2014 is associated to bad weather in the central regions, slower economy growth and cutdown of banquets number within the government initiated campaign, promoting moderation and economizing.
According to various data, almost half of produced beer is consumed in restaurants, and China is still the unchallenged leader in sales of draft beer, both among countries and among regions. Besides, Chinese keg market is dominated by local producers and its dynamics doesn’t immediately influence export-oriented companies. Until recently, the on-trade segment was developing due to growing beer popularity among young people, who increasingly often consumed beer in bars and restaurants.
Japanese market, the second by size in the region, is still striving to recover from the protracted crisis. In 2014, the market fell by …% to …* mln hl. We should mention, that due to high taxes on malt beer, already a half of Japanese beer sorts contains lower malt quantity or only its substitutes, that is why, the official data on “beer” market can vary. At the same time, in Japan, there are good preconditions for the development of craft beer market, which is only forming.
* Including low malt containing beer "happoshu" and no malt containing "new genre" sorts, according to Asahi report.
The Japanese enjoy going to various beer pubs and restaurants in big companies. According to the national brewers’ association, the share of keg beer was growing every year and reached …% in 2014. However, in view of the beer market decline, one can rather speak of the sales stabilization of different types draft beer approximately at the level of … mln. hl. The special feature of Japanese keg market is their small volume, usually up to 20 l. Most of kegs are purchased from China.
Beer consumption in Vietnam grew in 2014 by …% to … mln hl., according to the industry union. Vietnam beer market is gaining ever more weight in South Eastern Asia due to the growing population. As the competition in the off-trade segment grows, international and local market players Sapporo and Heineken in the first place, are actively investing into the on-trade segment. Besides, equipment for the existing bars and restaurants is being actively purchased and new HoReCa establishments are being opened.
Beer consumption 2008 - 2014, mln hl
Beer consumption per capita, 2008 - 2014, l
On-trade market share, 2008-2014, %
On-trade consumption 2008-2014, mln hl
Until recently, Eastern Europe and Russia in particular was considered to be the most promising region for European keg producers. The significance of this region started growing in the period from 1995 to 1998, as draft beer started growing more and more popular. The distribution of keg barrels by leading producers in Eastern Europe was organized via exclusive representatives, which made a contribution into business development.
According to the information from the leading keg producers, till 2012, against the background of positive growth of beer consumption on-trade, the keg realization in the countries of Eastern Europe was growing dynamically and provided for more than …% on their net sales volume. For instance, Schafer market share on Ukrainian market reached …%, more than …% on Russian market, and nearly …% on Kazakhstan market till 2012
By 2013-2014, the lingering beer market recession changed the import significance of Eastern Europe for keg producers dramatically. By 2014, the supplies to Ukraine fell to the minimum and sales to Russia declined nearly by …% from the level of 2012.
The total volume of Russian market of keg beer in 2014 equaled nearly … mln hl. The detailed analysis of the Russian on-trade segment and keg market is given in chapter “Draft beer and keg market in Russia”.
Ukrainian draft sector has been recently reducing in litres. In 2014 against the background of the record breaking collapse of the beer market of …%, the consumption in the on-trade segment reduced from … to … mln. dal. The decline of the segment kept pace with the general beer consumption decline, and accordingly, its market share in that period remained at the same level, that is …%. In the current year the situation in Ukrainian market became fiercer.
In Belarus the beer consumption in the past several years has decline a little. On-trade beer sales are still very small, that is, approximately …% in 2013 and 2014 and the most popular package is still PET bottle, accounting for … of the market. At the same time, in 2013, the draft sector demonstrated a positive gain of … p. p., having kept this volume during the past year.
In order to compensate for the serious decline, the leading three have focused on keg supplies to the American market, which is experiencing of growth the demand for kegs due to the boom in craft brewery.
In 2014, the general sales of beer in the USA grew only by …% to … mln. hl. according to NBWA data. However, the sales share of beer in kegs after a long term growth, has declined a little and amounted up to …%, exceeding … mln. hl., which allows us to speak of the USA taking the second place on the keg beer market (5 years ago the USA had only the fourth position).
There was a small decline of market share and keg beer sales, despite the significant increase of restaurant breweries, the growth of beer bars and a lot of festivals, organized by craft beer producers (according to NBWA). Obviously, their draft beer simply took share from keg beer by major companies. Thus, nearly a half of craft beer in the USA is sold on-trade, while in general the bar and restaurant segment accounts for a quarter of beer sales, according to the data by Technomic research company.
We should also mention slow turnover of kegs in the USA, as craft beer lovers consume it in small quantities. For the same reason as well as aiming for geographic expansion, craft breweries form comparatively big keg park.
Unlike the USA, the beer market of Canada did not see the craft boom due to stricter state regulation. According to the industry union Beer Canada, in 2014, the beer market shrank by …% to … mln. hl. And the share of draft beer equals that in the USA, i.e. …%, while its sales grew by …% to … mln. hl.
Brazil – the third by size beer market in the world, which has a good potential for draft sales and draft segment development due to young population. By the end of 2014, the beer production (which is approximately equal to the consumption) grew by …% to 141 mln. hl., making up for the past decline. The share of the on-trade segment in Brazil is very big, accounting for … beer sales. Perhaps, there is a connection to the colonial past. For Portugal too takes the lead in Europe having …% share of beer consumption on-trade.
Draft keg beer served in bars is remarkable for the Brazilians and called not “cerveza”(beer), but “shoppe” (from German word Schoppen - mug). As a general rule the production of small local breweries is sold in kegs. But despite the special status, the share of “shoppe” in Brazilian market is still not significant and does not exceed …%. And the main beer volume, which is sold in HoReCa consist of the mass brands in glass bottle or aluminum can. For this reason Brazil is not a key market for keg producers, but has a good potential, as craft breweries, are rapidly taking share from the market leaders. In this regard, Brazil reminds us of the USA, where the domination of the traditional beer sorts and big companies creates the preconditions for alternative brewing.
In order to analyze kegs sales in Western Europe, we used the data by Carlsberg Group and industry union The Brewers of Europe concerning the on-trade segment in different countries. Over the recent years, the dynamics of on-trade beer consumption in the EU countries has been rather different.
In Germany both beer consumption per capita and on-trade share had positive changes in 2014. Germans are still big beer lovers, consuming … l. of beer per capita yearly. The quantity of beer consumed at the point of sale reached … mln. hl. and the share of on-trade segment equaled …%. Draft beer accounts for almost all of this volume, which Germans prefer to drink instead of bottled whenever possible.
In the United Kingdom the situation was opposite in 2010-2014. Due to per capita consumption cutback and the decline of draft beer share, there was a shrinking of the on-trade segment in quantitative terms. However Great Britain is still the absolute leader by the volume drunk in bars and restaurants. In 2014, according to our calculations based on Carlsberg data, on-trade beer consumption in Great Britain totaled … mln. hl. (…% of the market).
However, in national HoReCa establishments clients often drink bottle beer, and the keg beer is gradually yielding its positions to “live” ale, packed in cask barrels. The share of draft beer in casks, according to CAMRA data, in 2013 reached …% while …% was taken by kegs (just nine years ago the relation was opposite).That is why, in spite of the developed segment of bars and restaurants, Great Britain is losing its importance for supply of traditional kegs.
Polish market is one of the regions with high potential for sales of draft beer. This owes to the poorly developed national channel of on-trade as compared to the western neighbors. The share of …% can rather be attributed to Eastern European structure of beer consumption. And Polish beer market is the third biggest in the EU. The problem might result from the monopolization of sales in HoReCa by major producers and the development of small brewers can change the habits of Polanders.
The boom in sales of “live” beer, that took Eastern Europe by storm in 2008, created preconditions for the growth of used keg segment. The main buyers of such goods are small and many regional brewers, who find the price important for business, while major producers prefer to work with new kegs.
As a general rule, major European beer producers try to renew their kegs collection after 10-12 years of service life. Such cycle is based on exploitation peculiarities, sanitary regulations as well as favorable state tax system of some countries. For example, in Great Britain state offers the brewers loans for containers purchase if these funds are spend on a consignment of new kegs after sale of the old ones. Such practice allows producers to decrease the taxable profit. In general the maximum admissible life time of kegs is 30 years and most of such barrels have accessible characteristics.
Used kegs after undergoing restoration procedure receive a second life in Eastern Europe. We should add that sometimes using such kegs can negatively affect the reputation of the brewery and its clients. The barrel on getting into secondary market undergoes a deleting of previously inscribed logotype, which leaves a kind of marking on the keg. In the countries of Western Europe brewers barely ever buy used kegs as they care for reputation of their company.
Due to the transparency lack in the business of used kegs trading, it is rather difficult to estimate the volume of this segment. According to the industry leaders’ rough estimation, in the countries of Eastern Europe nearly 100 thousand of used kegs are yearly sold.
The key component of the cost price for a keg barrel is still the cost of cold-rolled stainless steel AISI 304 determining about …% of the product cost.
In the recent three years, keg market price has remained mostly at the same level with insignificant price fluctuations within …%. The substantial fall of the stock quotations for AISI 304 steel took place in 2011, and since then it has not fluctuated that much. In January 2015, the price for AISI 304 steel equaled $..., which is by …% lower than the price in June 2014 and by …% lower than the peak price in March 2011.
The main reason for the stainless steel price decline in 2011 was lower prices for nickel. And nickel prices are still under the pressure of overproduction. An important event of the last year was the decision of Indonesia to stop the export of ore mineral, that resulted in a rise of stock exchange quotations. However by the end of the year the prices started falling again (from their peak value in May up to 2015 start, the decline reached …%). Experts expect gradual stabilization of stock exchange quotations for nickel and their further growth.
New kegs with a fitting in April 2015 in small wholesale on the EU market cost nearly $... for a 30 liter keg, and $... for a 50 liter keg. Small wholesale selling prices from Chinese producers excluding the transportation cost and customs fee were nearly ..% lower.
Under our estimation, the average price for a used metal keg with the volume of 30 liter and weight of nearly 10 kg was approximately $... in 2013-2014 on the boarder of the EU and Russia*. A keg with a volume of 50 l. weighing nearly 12.5kg. was not much more expensive, about $..., which is probably connected to the EU social policy and local brewers’ wish to get rid of the big volume kegs.
* Statistic declared customs price for a keg, in a consignment of a major producer, which previously was in turnover.
Small wholesale price for a used keg in Russia has been constantly fluctuating in tune with the dollar rate. For example when ruble weakened abruptly, the price for a 50 l. keg grew in rubles, but it was sold for less than $... a piece. In April 2015 the average price grew to $... a piece.
In American market the price for a 50 l.keg by Geemacher equals $... a piece in case of wholesale purchase, and the traditional keg, of 1/2 barrel costs $.... The price of import kegs in the USA varies significantly depending on the producing country. Used kegs of 1/2 can be bought for $... .
Draft beer and keg market in Russia
What differs the beer market of Eastern Europe is specialized retail, which along with bar and restaurant (on-trade) segment is an important retail segment also using beer kegs. These are shops selling beer bottled in PET from keg by non-foaming filling technology.
Without this realization channel, the development of small regional brewers would have been much slower, as due to the narrow HoReCa segment and retail monopoly by major companies, there would be no outlets for them. Thus, the sales volumes of keg beer in Russia exceed the on-trade share significantly.
Since 1 January 2013, the prohibition to sell beer in kiosks has come to force, so some of consumers switched for draft beer in HoReCa from packed beer, and some preferred draft beer from specialized retail. Although most of consumers started buying more beer at supermarkets and food stores near their home or reduced their beer consumption.
As a rule, the significance of specialized retail (shops of draft beer) is in inverse proportion to the size of the brewery.
Thus, some small producers pack beer only in kegs and draft store in the local markets are the key sales direction. In specialized retail minibreweries make their product range wide by premium and special beer sorts. Despite this, they do not dominate in the segment as they cannot compete by price with regional producers.
Companies of regional scale pack most of their production in glass and PET for sales in retail network. The share of draft beer in their sales under our estimation is nearly …%, but can fluctuate significantly. Almost all draft beer is delivered not to on-trade but to specialized retail, where the sales share of the regional producers is a little less than a half.
The major brewers, trying to be in tune with the emergent trend of sales growth of the local producers, also output cheap regional sorts, which are packed in PET and kegs. Their number has increased sharply in 2008-2012, and many of their new brands had no link to already well-known brands. This beer, as well as the production of the regional breweries is supplied to specialized retail, but here big companies do not have strong competitive advantages and their share is comparatively small.
Against the fall of the Russian beer market, the share of the on-trade segment has grown in the past 2 years from … to …% according to Carlsberg Group report. By size, the volume of beer consumed at the point of sale exceeded 8 mln.hl, if we rely on the given data. Obviously, this growth resulted from the redistribution of beer sales by trade channels after the prohibition to sell beer in kiosks.
HoReCa establishments on the one hand prefer complex service by major producers that provide branded equipment along with beer. On the other hand, wishing to make their range wider by special beer sorts, they frequently turn to small brewers or buy imported beer. Beer by medium regional producers is seldom delivered to restaurants in regional centers. Besides, under our estimation, in Russia there are more than … restaurant breweries, that produce nearly … mln. hl. of beer on their own for realization.
Basing on these data, we can roughly estimate the market size and the structure of the draft beer sold from kegs. The total market volume of keg beer in 2014 reached … mln. hl. More than … of the supplies is provided by major beer producers. Approximately … of the draft beer is output by medium regional breweries. Taken together, industrial mini beer plants and minibreweries output about …% of the keg beer and next …% is produced by restaurant breweries. The import accounts for about …% of realization of beer in metal kegs (if we included disposable kegs, it would be …%).
* A part of the beer volume in HoReCa is delivered already packed which is accounted in this estimation.
In order to estimate the keg number in the turnover in Russian market, we used the data on the volumes and structure of import supplies, given by Marketing1.ru company (see chapter “Analysis of keg import to Russia”). The correctness of this estimation is assured by the fact that virtually all kegs get to Russian market from abroad.
In order to estimate the keg number in the turnover in Russian market, we used the data on the volumes and structure of import supplies, given by Marketing1.ru company (see chapter "Analysis of keg import to Russia"). The correctness of this estimation is assured by the fact that virtually all kegs get to Russian market from abroad.
If we consider that structure of keg stocks of Russian enterprises corresponds to the structure of import supplies, the yearly sales volume of draft beer in metal kegs will be distributed this way: nearly … of beer is sold in 50 l kegs, though their number in the turnover is less than in 30 l. kegs. And nearly …% of beer is sold in 30 l. kegs.
It is necessary to assess the key parameter, namely, the average number of keg turnovers per year for estimation of keg number. Basing on the available estimations by keg producers, let us consider that in the average in Russia a keg undergoes … cycles of beer filling per year. By multiplying this number by keg capacity, it is easy to define the volume of each keg realization per year, and taking into account the calculated market size of draft beer, we can define the total number of keg in the turnover.
Thus, the total keg number in turnover in Russian market is nearly … mln. kegs. A half of this volume is comprised by 30 l. kegs and more that 2 mln – by 50 l. kegs.
According to the reports by international industry organizations, every year, because of mechanic damage, wear, and stealing …% falls out of the turnout. In the market of Eastern Europe overwork kegs can be still in operation, and their life cycle lasts much longer than in the EU countries. On the other hand, the market receives a lot of already used or restored kegs, and the level of damage and stealing is not likely to be lower than in Western Europe.
Possibly, the complex of these factors offset each other, and the share of keg loss does not differ much from the EU. For example if we compare the volumes of the official foreign supplies, which approximately equal the keg market size, we will see the same number, that is, nearly …% of the calculated turnover of kegs in Russia.
Analysis of keg import to Russia
Russian market was until recently the key one for western suppliers of new and used kegs, as it was almost fully dependent of the import. In 2014, the volumes of kegs purchases were seriously reduced. In order to have a clearer picture of the market we carried out an analysis of keg import structure.
We examined the supplies of metal kegs of volume 10-100 l. As the source of information we used our calculations, based on statistical data of Foreign economic activity, given by Marketing1.ru company.
By the end of 2014 the country officially imported … mln. kegs (with and without beer), which is by …% more than in 2013. As kegs are non-disposable returnable package, the main part of that number (…%) was returned to the owners.
In order not to pay the customs duties when importing returnable package, two supply schemes are used. These two schemes do not differ much: temporal import of goods and their reimport or temporal export of goods and their subsequent reimport. In either case beer is declared separately from them, though, it is transported inside the kegs.
The remaining import part needs more detailed consideration. Following the customs regulation, we will call them kegs for domestic usage. These are empty kegs, either new or used or restored.
In 2014, the trade balance* on metal kegs of different capacity totaled … thousand pieces. Their number decreased by …% as compared to 2013. The net capacity of imported kegs in 2014 fell by …% to … mln. l.
* The number of imported kegs for domestic usage or imported into free customs zone, net of the usual keg export.
The future of imported kegs for domestic usage can be described by three roadmaps given with the supply significance declines.
• Kegs were purchased by breweries to renew their barrels stock.
• Due to keg loss or damage, importing companies often need to renew their keg stock by usual import as the customs regulations of temporal import demand it.
• Kegs are delivered to the warehouses of factoring company and exclusive representatives of keg producers for further resale.
Let us examine the structure of keg import by the package volume*. The most popular on the market were kegs of 30 l. accounting for …% in quantitative terms in 2014. However, if calculated by volume, they occupy the second place after 50 l kegs. In 2014, the supplies of 30 l. kegs by pieces fell by …% to … thousand.
* In the given structure we concede error as it is impossible to determine all kegs entitled to return.
The second place by popularity belongs to barrels of 50 l. A total of … thousand was impoterd in 2014, which is by …% less than in 2013. By the total volume their share reached …%.
The only keg volume that saw demand growth was 20l. Their sales grew by …%, having almost run at 40 thousand. In quantitative terms the share of this package grew by … p.p., to …%, and by … p.p. to …% in volume.
Package of other capacity (10, 25, 40, 45, and 100l.) is not popular and its market share is very insignificant.
The geography of countries producing kegs imported for domestic usage is represented mostly the EU countries. Under our rough estimation, over the two years, German producers made …% of kegs, the package by Czech production accounts for at least …% of supplies, and …% was produced in Spain. Other EU countries, that have keg production account for …% of supplies. Chinese suppliers in the structure of the official import have only …% of supplies.
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The article materials were prepared using statistics of import supplies provided by company Marketing1.ru (http://marketing1.ru/).
The chapter on the world beer market has the data from national statistical services, industry unions and beer producers: The Brewers of Europe, Carlsberg Group, Kirin Holdings and others.
The data on the market volumes and their interpretation are our assessment based on calculations and the current trends in case the source has not been named.
We do not claim the given information to be absolutely correct, though it is based on data obtained from reliable sources. The article content should not be fully relied on to the prejudice of your own analysis
11 Июн. 2015