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. ...
Chinese beer: under pressure as economy slows amid competition
Not all Chinese consumers agree. Sales of Yanjing, along with those of other domestic brewers, are under pressure as the economy slows and foreign brands make inroads.
Beer sales in China dropped 8 per cent by volume in the first half of 2015 from a year earlier, a fall that was blamed on the state of the economy but also unseasonable weather.
Sales are likely to return to moderate growth, but the industry trends of more consolidation and more attempts to shift upmarket to protect margins are likely to continue, according to FT Confidential Research, a research service from the Financial Times.
Yanjing faces a greater challenge than market leader Tsingtao. According to a recent FT Confidential Research survey of 1,000 beer drinkers across the country, Yanjing was the fifth most popular brand, cited by 15.9 per cent of respondents as one of the two beer brands that they most often purchase. It was well behind Tsingtao, which was cited by 57 per cent of respondents.
Yanjing isn’t helped by its limited geographic reach: it’s a Beijing stalwart, deriving 25 per cent of its sales from the capital, though the company is trying to expand its presence by targeting rural areas.
But Yanjing is also a popular beer with low income groups in a market of changing and increasingly sophisticated tastes. It lags behind rivals offering more mid-priced to premium beer to offset falling margins. Tsingtao’s peach beer comes in a shocking pink can aimed at a female audience, while Yanjing’s Party beer promises to “put you in a happy state of mind”.
The demand for better beer is certainly there: the FTCR survey found that 58 per cent of respondents usually pay more than Rmb6 ($0.95) for a 330ml bottle of suds, a level considered mid-range and above by brewers.
But even market leaders Tsingtao and CR Snow, whose mid-priced and premium beer sales account for 40 per cent and 45 per cent of total sales, face a challenge from the rapid growth of imported brands. Domestic beer volume sales may have fallen in the first half but those of imported beer rose 63 per cent, continuing the rapid growth of recent years as import costs tumble and China’s army of nightclubbers multiplies.
Imports account for just 1 per cent of total overall consumption but they are likely to continue growing at a rapid clip. Domestic beer sales growth may return to the low single digits should the forces blamed for this year’s falls prove temporary, but domestic brands will come under increasing pressure from these imports.
Industry woes are also likely to keep driving consolidation. Tsingtao is buying Suntory’s share in an eastern China joint venture to try to turn around sales there after they fell 15.2 per cent in the first half.
AB InBev’s purchase of SABMiller may prove the exception: SABMiller owns a 49 per cent stake in CR Snow and the tie-up would result in combined market share of around 40 per cent. That’s likely to be a six-pack too many for Beijing’s antitrust regulators.
14 Дек. 2015