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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.

Malaysia. CIMB Research retains Overweight on brewers

CIMB Equities Research is retaining its Overweight stance on the brewers as the recent increase in excise duty will not negatively impact the earnings of GAB and Carlsberg significantly.

Hence, it adjusted its earnings slightly by lowering malt liquor market (MLM) volume and imputing higher average selling prices to account for the changes in the duty structure as well as the removal of the ad valorem tax.

“We maintain Overweight on the sector while switching our sector’s top pick to Guinness Anchr Bhd (GAB) from Carlsberg given the higher potential upside,” it said on Thursday.

CIMB Research said the two brewers move to hike prices on average by 2%-5% as fair as they have been maintaining prices since 2015 despite the implementation of Goods and Services Tax (GST) which came into effect in April 2015, and other cost hikes.

Any downside to MLM volume is expected to be limited given the manageable quantum of increase and consumers switching to beer from other alcoholic drinks. The removal of the 15% ad valorem tax creates a level playing field for all, it said.

“Overall, we believe that MLM volumes are unlikely to be impacted significantly. The removal of the 15% ad valorem tax across all beer categories is also positive for brewers.

“Given that all types of beer with similar alcohol content will be subject to the same fixed rate based on the duty structure, this creates a fair competitive environment regardless of the brewer or brewing location,” it said.

11 Мар. 2016



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