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3-2019

Russia: Positions of Brewing Companies

The 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 brands

In 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 2019

During 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.

India. Why only Vijay Mallya?

Everyone wants a piece of Vijay Mallya, who left India even as a consortium of banks and investigative agencies were tightening the noose to recover money his company owed and see whether there were any irregularities in how these loans were issued and what the money was used for.

The Supreme Court on Wednesday issued notice to Mallya over a plea seeking to stop him from leaving the country. Attorney general Mukul Rohatgi, representing the consortium of 17 banks, informed the court that Mallya left the country on 2 March, according to the Central Bureau of Investigation. He is likely in London, Rohatgi added.

To be sure, Mallya had not been asked not to leave the country by anyone when he left on 2 March.

India’s largest lender State Bank of India (SBI) declared Mallya a wilful defaulter in November. Mallya’s Kingfisher Airlines Ltd, which was grounded in 2012, owes around Rs.9,091 crore to the consortium of banks.

India’s top investigative agencies are now gunning for Mallya. They want Mallya’s passport, arrest, asset disclosures, money. Banks have become aggressive in their efforts to recover money from him in the last two weeks, especially since news of his sweetheart deal with Diageo Plc. to exit United Spirits Ltd broke.

But why so late and why only Mallya?

“The question is why only Mallya. There are many other defaulters. Though Mallya and UB Group companies are wilful defaulters, the culpability of banks also needs to be highlighted,” said Shriram Subramanian, founder, InGovern Research Services, a proxy advisory firm.

Subramanian said a recent report by a leading brokerage firm highlighted the financial stress at the top 10 Indian conglomerates including Lanco Group, Jaypee Group, GMR Group, Videocon Group, GVK Group, Essar Group, Adani Group, Reliance Group, JSW Group and Vedanta Group. His reference is to CSFB’s House of Debt report .

Banks should go after other groups and wilful defaulters as well, Subramanian said.

“There is a rot in the system, a nexus between politicians, lenders, bureaucrats and corporates. It’s the time for a clean-up by exposing all the defaulters. One should not forget Central Bureau of Investigation (CBI) had arrested the chairman and managing director of Syndicate Bank Sudhir Kumar Jain for allegedly accepting a bribe to enhance the credit limit of private companies by-passing rules,” Subramanian said. That was in 2014 .

“Lenders should learn from the Mallya episode, and should start adopting prudent lending practices, while also pursuing recovery, including change of ownership, from defaulting borrowers,” he said.

Loan approvals to potentially stressed companies have risen 85% since 2011-12 as banks continued to lend to such borrowers despite deteriorating cash flows and increased debt on their balance sheets, UBS AG said in a report in July 2015.

The report was based on a proprietary survey conducted by UBS pertaining to a sample of around 100 potentially stressed companies, covering some $100 billion of loans. Over 7,000 collateral documents filed at the Registrar of Companies that are used to secure loans were analysed for the survey, UBS said.

“Mallya may be far more high profile than others, but he is not the only one,” said Amit Tandon, founder and managing director of proxy advisory firm Institutional Investor Advisory Services India Ltd. “There are many other willful defaulters and the banks need to methodically pursue all these defaulters. The support shown by the (Indian) courts, should encourage lenders to intensify their efforts on recovery,” Tandon said.

The Reserve Bank of India (RBI) has been trying to find ways to resolve the stressed asset problem faced by state-run banks for the last two years.

In January 2014, RBI announced a new framework to deal with stressed assets, as part of which banks were asked to form a joint lenders’ forum to recognize and resolve stressed assets.

The regulator is taking a zero-tolerance approach towards bad loans and has asked banks to clean up their books by March 2017.

As part of this effort, banks were told to classify visibly stressed assets as bad loans in the December 2015 and March 2016 quarters.

The clean-up has meant a surge in NPAs.

Gross NPAs of 39 listed banks surged to Rs.4.38 trillion in the quarter ended December 2015 from Rs.3.4 trillion at the end of the September quarter, according to data collated by corporate database provider Capitaline.

Mallya has previously said he has been made the face of a problem not of his making.

“Personally I am not a borrower or a judgement defaulter,” Mallya said on Sunday.

He added that despite pledging blue chip securities and depositing significant amounts in court, a successful disinformation campaign has ensured him becoming the poster boy of all bank NPA’s.

“In fact, banks have NPAs of Rs.11 lakh crore and have borrowers who owe much more than the amount allegedly owed by Kingfisher Airlines to the banks—a fact never alluded to or widely reported by the media as in my case,” Mallya said.

Mallya pointed out that none of these large borrowers (who owe significantly more than Kingfisher Airlines) have been declared wilful defaulters. Mallya said he and his United Breweries Holdings had been declared wilful defaulters by certain banks on technical grounds.

Many disagree.

Hemindra Hazari, an independent analyst and a long-time watcher of the banking sector, said Mallya’s case was a high-profile one and a test case for Indian lenders.

“Mallya is a high profile defaulter who throws lavish parties and publicises the same. There could be lavish parties organised by other defaulters, but they don’t publicises it like Mallya,” Hazari said.

Reserve Bank of India governor Raghuram Rajan, too, has been pushing banks to get tough on defaulters

In a 22 January interview with NDTV, Rajan took a dig at those who owe banks money, but continue to lead lavish lifestyles.

“If you flaunt your yacht, massive birthday bashes, etc, even while owing the system a lot of money... it seems to suggest that you don’t care. I think that is the wrong message to send out. If you are in trouble, you should show that you care by cutting down your expenses,” Rajan told journalist Shekhar Gupta on NDTV’s Walk The Talk show.

Mallya was always known for his flamboyance. He built a reputation for the fast life and flashy parties. He even bought a yacht (the Indian Empress). And in 2003, his UB Group launched the Kingfisher Calendar, which featured top models in bikinis.

Banks are owed a significant amount by wilful defaulters, a term used for borrowers who don’t repay loans although they can afford to do so.

Banks and investigative agencies are right in going after Mallya as the lenders will be facing questions of defaults while Mallya is leading a luxurious life without paying his employees and banks, Hazari said.

“Lenders should start the clean up act from Mallya.”

10 Мар. 2016

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