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Global hop market

A 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 Russia

Germany 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 Resources Beer gains SABMiller stake in China Snow at bargain price

China Resources Beer will pay $1.6 billion to buy out SABMiller Plc's stake in their China Resources Snow Breweries venture, a much lower price than expected and sending shares in the state-backed firm soaring by a quarter in value.

The deal which gives China Resources Beer (Holdings) Co Ltd full control of Snow, the world's No. 1-selling beer by volume, is part of a series of divestments taking place to gain regulatory approval for Anheuser-Busch InBev $100 billion-plus takeover of rival SABMiller.

The sale of the 49 percent stake may help the group gain regulatory approval from Beijing.

Jeremy Yeo, an analyst at Mizuho Securities Asia said the price tag was significantly below the $3 billion to $3.5 billion he had expected.

"This news, in itself is positive for CR Beer's shareholders, from the standpoint of better-than-expected potential near-term EPS accretion," he wrote in a note to clients.

The Snow deal, which would make China Resources the largest brewer in the country with a 30 percent market share, is contingent on the AB InBev-SAB Miller deal going ahead. It is set to be settled in cash using a combination of funding options including debt and/or equity financing, China Resources Beer said in a statement.

Shares in China Resources Beer jumped 25 percent to their highest level in five years, regaining ground lost so far this year after the stock was dropped from the main constituents in the Hang Seng Index following a regular review by the index compiler.

Steven Leung, a sales director at UOB Kay Hian in Hong Kong, said the deal came earlier than the market had expected.

"The deal will definitely bring in some positive impact to the company, both in enhancing its market share and prospects in the local beer industry," Leung said.

China Resources accounted for 23.3 percent of the beer market in China in 2014, while Tsingtao Brewery ranked second at 18.4 percent, according to data from Euromonitor.

China Resources Beer changed its name from China Resources Enterprise after it announced a plan last April to sell all its non-beer assets to controlling shareholder China Resources (Holdings) Co for $3.6 billion.

China Resources Snow Breweries had a net asset value of HK$27.2 billion ($3.5 billion) at the end of last year, the statement said. Its net profit fell 21 percent to HK$1.51 billion in 2014 from a year earlier.

2 Мар. 2016



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