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. ...
More Brewers in Sights After China Resources Snow Beer Buy
China Resources Beer (Holdings) Co. on Wednesday agreed to buy SABMiller’s stake in Snow Breweries for $1.6 billion, smoothing the way for a takeover of its partner by Anheuser-Busch InBev NV. The Hong Kong-listed unit of China Resources Holding Co. currently owns 51 percent of the venture.
“Once the SABMiller deal is completed, they may start to buy some small breweries again,” said Bloomberg Intelligence analyst Duncan Fox. Potential targets include Beijing Yanjing Brewery Co., China’s fourth-biggest brewer by volume, although deals would be subject to balance sheet constraints, he said.
Yanjing, backed by the Beijing municipal government, plans to sell about a 20 percent stake to a foreign strategic partner, people with knowledge of the matter had said last February. The brewer of Yanjing Beer denied those plans.
Small regional breweries with shares of around 2 percent or less make up the bulk of China’s expanding beer consumption, while state-linked beermakers including China Resources and Tsingtao Brewery Co. lead nationally, according to data from Euromonitor International.
Shares of Chinese brewers rose, with Shenzhen-listed Yanjing gaining as much as 1.5 percent to 6.93 yuan, its highest intraday level in a week. China Resources Beer and Tsingtao advanced as much as 4 percent and 3.7 percent respectively in Hong Kong trading. The benchmark Hang Seng Index fell 0.9 percent.
China Resources plans to buy up regional brewers as it sees “great opportunities” to enhance its presence in this way, the beer unit’s Chief Financial Officer Frank Lai said in August, comparing the strategy to how the company strengthened its position in southern China by buying Kingway Brewery Holdings Ltd.’s assets in 2013.
Large beermakers such as China Resources may need to merge to gain market share in order to survive, said Haitong International Securities Co. analyst Nicolas Wang. They also need to improve their products to meet Chinese customers’ rising demands for better quality, as the local market is already crowded with low-end beer, said Hong Kong-based Wang.
While Asia has been awash with low-priced beer for decades, rising incomes mean younger connoisseurs are willing to spend more. For example, AB InBev said in a 2015 report that profitability is as much as nine times greater for premium beer in China compared with mainstream lines.
Snow, which had a 23 percent share of China’s market last year, outsells all other beers globally by volume after overtaking Bud Light in 2008. The brewery produces enough liquid to fill about 12 Olympic-sized swimming pools every day, according to SABMiller’s website.
That’s mainly a function of the country’s huge population, as China Resources sells hardly any beer overseas. The brewer has been trying to lift the image of its products in China by raising prices and pushing out higher-grade brews, said BNP Paribas SA analyst Charlie Chen.
“They will continue to do so because their average selling price is still lower than Tsingtao,” Chen said. The owner of Snow Beer has been able to achieve about 5 to 10 percent increases in average selling prices per year by shifting focus to smaller bottle sizes and cans, as well as introducing premium products, he said. The company is selling beers for as low as 3 yuan (0.5 cents) per bottle and as much as 25 yuan for their so-called super premium brews.
China Resources said in an interim report last year it’s aiming to drive sales and profitability by growing higher-priced brands with better margins. These mid- to high-end products, which are priced at above 5 yuan per 500 milliliters, accounted for 41 percent of the company’s sales volume in 2014, up from 29 percent in 2012.
The Chinese company’s aspiration of capturing the higher end of the drinks market could be hampered as AB InBev becomes a competitor, instead of its partner. AB InBev’s Budweiser, considered a premium brand in China, has a 2.6 percent share of the market, according to Euromonitor.
China Resources may “need to tie-up with another brewer to get some premium brands moving through, or maybe they have learned enough of SABMiller about the art of brewing that they create another brand,” Bloomberg Intelligence’s Fox said.
3 Мар. 2016