The beer market dynamics in Russia is approaching zero, yet major brewers are divided into those who developed considerably in 2017 and those who considerably reduced their volumes. For instance, company Efes has managed to substantially extend their sales due to restrained pricing policy and activity in the modern trade. Heineken has also demonstrated an excellent performance promoted by significant increase of advertisement budgets launching a non-alcohol sort of the title brand and unusual activity in the economy market segment. Carlsberg and AB InBev have been focusing on margins and lost a market share of their inexpensive brands. Serious dependence on PET package and mass enthusiasm about Zhigulevskoe have negatively impacted the most of big regional brewers, that have been for the first time pressed by the leaders in the key sales channels, especially in Volga and Central regions. In the small business there has been a noticeable slowdown in appearing of new restaurant breweries, yet the number of craft breweries has been growing rapidly. In 2018, the beer market is likely to grow a little, while the share of AB InBev Efes may decrease due to the integration. ...
“Catalogue of Russian Beer Producers 2018” includes 1070 businesses ranging from large subsidiaries of international companies to rather small restaurant and craft microbreweries.The catalogue includes 32 large breweries, 75 regional breweries, 693 industrial mini- and microbreweries as well as 270 restaurant breweries. ...
Global hop marketA local alternative to mass beer suggested by independent brewers has been successful and is now altering the global market. Beer is becoming more diversified, so transnational companies have to accept the new game rules and to switch focus to young and fast growing markets. All these processes increased the demand for aroma and bitter hop as well as their acreage expansion on two continents. However now there appeared a downward trend of alcohol consumption in the world, so even special sorts can soon turn to be sufficient. In this connection the dynamic American hop market is already facing some problems. EU hop producers have become more cautious, they are not racing to exceed the demand and look forward with more confidence, judging by the contract terms.
Hop Market in RussiaGermany still dominates the Russian market, yet over the recent two years one has been able observe a continuous success of Czech hop suppliers. Their expansion and growing popularity of hops from the United States became the drivers of supplies growth in 2016 despite the preceding modest harvest crop in the EU, as well as the factor of relative stability in 2017. In this connection, in 2017, the ratio of the varieties continued to shift towards the aroma ones, and the supplies of Magnum hop and other alpha varieties were reduced. However, the import of bitter hop pellets is partially replaced by extracts, especially from the major beer manufacturers. Total volumes of alpha acid supplies, according to our estimation, decreased by approximately 5% and returned to the level of 2015. Barth Haas Group continues dominating the hop products market; HVG also increased its weight. At the same time, Morris Hanbury significantly reduced the supplies in 2017.
China. End of growth has country’s top two brewers battling it out
Industry leader China Resources Beer (Holdings), whose strategy has been to concentrate on the domestic market and sell large volumes of low-price brews, is expanding its nationwide sales network and putting more effort into promoting higher-end offerings.
Second-ranked Tsingtao Brewery, which has focused on midrange products and cultivating overseas markets, is responding to the toughening business climate by developing new products to diversify its lineup.
War of attrition
China's top breweries and their foreign rivals have been locked in a price war since September. CR Beer, Tsingtao and Belgium's Anheuser-Busch InBev, which commands the third-biggest share of China's beer market, are all competing to undersell each other. Now 20% discounts are common sights in supermarkets across Shanghai. This is noteworthy when considering that beer was cheap to begin with; even high-end 500ml offerings carry suggested retail prices of around 10 yuan ($1.56).
After expanding in lockstep with the economy, China's beer market surpassed that of the U.S. to become the world's biggest in 2002. In the process, brewers underwent a dramatic consolidation process. At one point, China had more than 800 players. But the number contracted sharply as major players swallowed up smaller rivals. Today, the top five players control roughly 70% of the market, with CR Beer and Tsingtao commanding shares of 23.2% and 18.4%, respectively.
Beer sales in China totaled 49.39 million kiloliters in 2014, double the U.S. figure. But this was not happy news to the industry, as it translated to a 1.8% drop from a year earlier, marking the first-ever contraction in the country's beer market.
Another worrying factor was disappointing beer demand this past summer, which left brewers with excess inventories. CR Beer opened hostilities by unloading its inventories at steep discounts.
"Rivals responded by matching CR Beer's discounts, kicking off a war of attrition in the world's biggest beer market," an industry watcher said.
The China Resources group expanded into the beer business in 1993 by purchasing a regional brewery. It has become China's No. 1 brewer by aggressively pursuing takeovers and making the most of the group's nationwide network of about 4,800 retailers, which includes a supermarket chain run by China Resources Vanguard. Its annual sales volume exceeds 10 million kiloliters.
Low product prices have driven the company's growth. A 500ml bottle of its flagship Snow brand beer sells for just 2 yuan. But even the top brewer has not been immune to the effects of the market contraction; CR Beer's sales for the six months ended June declined 1% on the year.
The company's response was to concentrate on the brewery business. It transferred its money-losing retail business to parent company China Resources (Holdings) in April.
"We will focus on the beer business and increase our investment in a sustainable manner," said Hong Jie, chief executive officer of CR Beer.
As a first step, the company is looking to shore up its sales and profits by expanding its sales channels, with a focus on regional cities and farming areas, where competition is less fierce. At the same time, the company has begun adding more higher-end offerings.
The latter action is effectively "a declaration of war against Tsingtao Brewery," an industry insider said.
Strong in Shanghai
The No. 2 brewer is also feeling the heat from AB InBev. Although its mainstay Budweiser belongs to the upmarket segment, selling for around 10 yuan, the Belgium-based multinational has managed to win customers away from Tsingtao through active promotional activity in Guangdong Province, Tsingtao's key market, among other areas.
An alarmed Tsingtao struck a deal with Japan's Suntory Holdings in October to gain full control of 50-50 ventures in Shanghai and Jiangsu Province established in 2013. This deal gives the Chinese company a solid foundation to work on, as it will lift its share of sales in Shanghai to 50%. That is quite a coup considering the city is China's biggest beer market.
The company has also stepped up efforts to develop high-value-added beers. Many Chinese beer brands sell products with alcohol contents of only around 3.5%, achieved by diluting the beer with water. Some blame the bland flavors of these beers for the declining sales.
To lure drinkers back, Tsingtao has launched new offerings, including a bitter-tasting black beer, a white beer made from wheat, and a beer for women that is less bitter and has peachy fragrance. The company aims to further hone its product development capability and release more such products.
A crucial challenge for both CR Beer and Tsingtao is consolidating the old, inefficient breweries they have accumulated through their many acquisitions. CR Beer owns about 90 breweries, whose overall utilization rate stands at an appalling 50% or so. With Tsingtao also counting nearly 80 breweries to its name, both companies must close some facilities and cut jobs to boost productivity.
Possible power shift
A massive deal earlier this month by AB InBev will see the world's top brewer gobble up its biggest rival, second-ranked U.K. brewer SABMiller. This will likely have repercussions for the Chinese beer industry.
SABMiller owns 49% of China Resources Snowflake Breweries, the core operation of CR Beer. With the combined Chinese market share between CR Beer and AB InBev reaching nearly 40%, some believe SABMiller will sell its shareholdings in CR Snowflake Breweries because AB InBev will feel uneasy about having too large a market share. If SABMiller's interest in CR Snowflake Breweries is sold, the power balance in the global beer market may also shift depending on who the buyer is.
28 Дек. 2015