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. ...
India. Dutch beer giant Heineken appoints JM Financial to help increase stake in United Breweries
Mumbai-based JM, which successfully helped Diageo buy out United Spirits in 2013 as one of the key buy-side advisers, is now back advising Heineken. Its role will be crucial if the Dutch firm is to buy the remaining stake in UB it needs for majority control. The Dutch brewer is already the largest shareholder in United Breweries, maker of Kingfisher beer, with a 42.38% stake. It has been keen to take it beyond 50% either by buying directly from liquor baron Vijay Mallya or his creditors.
Mallya, his family members and associate companies together own 32.89% of the company and 47.68% of that is pledged, according to data sourced from BSE till December 31, 2015.
Mallya directly owns 8% in UB but 98.11% of that is pledged. UB's current market cap is Rs 20,899 crore. The market value of the pledged shares is Rs 3,217 crore at Monday's closing price of Rs 790.45 apiece.
As the heat on Mallya's business empire rises, and he faces lengthy questioning by the country's investigative agencies, Heineken would be keen to mop up pledged shares that are held with banks and financial institutions as a guarantee for the Kingfisher airline loans. Over the last one year, the creditors have been periodically exercising their rights and selling these shares in the open market to recover dues from the erstwhile liquor baron and Heineken has used those opportunities to mop them up. But with JM Financial on board, Heineken will negotiate directly with lenders as they seek to proactively cash them, said three sources aware of the matter.
In 2009, Heineken and Mallya unveiled a partnership with both controlling 37.5% stake each. Both had signed a "standstill agreement" that ensured equal shareholding and joint management. Both sides also had equal board representation with Heineken getting the post of chief financial officer.
But Mallya's troubles emanating from the grounded Kingfisher Airlines gave the foreign partner an opportunity to slowly raise stake in the company, which accounts for roughly half of the domestic beer consumption.
Sources say Heineken has gained rights to full management control as "equal and joint management clause" no longer exists. However, they added, Heineken has been in no tearing hurry to disturb the current setting. But the current situation is forcing them to take precautions.
India's largest lender by assets, State Bank of India, along with a consortium of banks had served notice to Mallya, defunct Kingfisher Airlines and his holding company, United Breweries Holdings, as wilful defaulters for not repaying Rs 9,000 crore loans. Banks are forbidden from giving loans to companies where a wilful defaulter is on the board and United Breweries board may feel itself under pressure to do something about Mallya's presence.
Heineken may also be feeling pressure of another kind. While it has no significant quarrel or dispute with Mallya, the Dutch giant feels duty-bound to protect its most precious investment in the country from raiders and opportunists willing to fish in troubled waters. The last thing Heineken needs is for a rival to jump in and buy the pledged shares and that could explain the reason behind the JM appointment and the need to increase its stake.
In November 2015, YES Bank sold 4.25 lakh shares of UB to Heineken International BV for Rs 39.48 crore through block trades on the stock exchange. In Jan 2016, ICICI Bank, the country's largest private sector lender, picked up 1.95 million shares of United Breweries Limited for a little over Rs 186 crore through an open market transaction.
Last July, Heineken acquired a decisive 3.12% stake offloaded by United Spirits that freed them from a previous shareholder pact with Mallya. Prior to that it had already picked up shares and had increased its shareholding by 2%.
UB group and JM Financial declined to comment. Mails sent to Heineken and Mallya did not elicit a reply till the time of going to press. Text messages sent to Mallya also did not generate any response.
"I don't think there is hostility between Mallya and Heineken top brass but their hands are forced. Instead of a third party picking them up, they would like to corner as much as they can as the situation has become very volatile," said an official in the know. "Heineken would not miss this opportunity. They are getting their act ready in case of such eventuality," he added.
"They will also have to opt for an open offer if they acquire more than 5% equity through the creeping acquisition route. A local advisor will be helpful to navigate the rules and regulations," added another source on condition of anonymity as the talks are still in private domain.
Asia-Pacific, which accounts for almost a fifth of Heineken's operating profit, was the company's fastest growing market in the first half of last year. With no significant competition from local peers, global majors - Danish brewer Carlsberg and SABMiller Plc - has been gaining market share.
India's beer market is growing significantly faster than the world average, largely because it is still very small. Indians consume on average about 2 litres of beer a year, compared with 18 litres in Asia and 57 litres in western Europe, a note from rating agency Moody's said in July of 2015. Two-thirds of Indians don't drink alcohol at all, often for religious or cultural reasons, but rapid urbanisation and a fast-growing middle class are changing consumption habits, making India an attractive market for global brewers.
15 Мар. 2016