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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. Guinness Anchor Bhd cautious about hiking prices in near term

Brewery Guinness Anchor Bhd (GAB) said it will be cautious not to hike prices of its products further in the near term on pressures of a higher inflation rate in the second half of 2016.

The market leader in the brewery business had adjusted the prices of its product lines as soon as the new tax structure kicked in on March 1 when the Government replaced the malt liquor’s tax struture, which led to a hike in the price of beer by between 8% to 10%.

Asked whether another price hike was likely to take place after the Anti-Profiteering Act period ended on June 30, managing director Hans Essaadi said with consumer sentiment in its 10-year low, it would be wary.

“Hiking prices during this time would not make sense and we are cautious. But, we also run a commercial business where we are diluting our margins.

“It is something that we need to look at, as we won’t be able to do any price hike until a certain period of time,” said Essaadi after a tour of the brewery yesterday in conjunction with its Golden Jubilee.

The procurement agreement with Heineken NV had benefitted GAB, he said, adding that it was able to purchase raw materials at lower price.

“The procurement ensures pricing are stable,” he added.

The tour was also held in line with GAB’s rebranding exercise just after Dutch brewer Heineken NV became the major shareholder of GAB in October last year.

Heineken holds a 100% stake in GAPL Pte Ltd, which in turn owns a 51% interest in GAB.

Upon shareholders’ approval at an EGM to be held on April 20, GAB will be known as Heineken Malaysia Bhd.

Meanwhile, UOBKayHian (UOBKH), in its note, believed that consumers were able to accept the price hike of only 3% to 5%.

Although brewers had partially absorbed the excise duty hike on malt liquor with high alcohol content of more than 6%, the financial impact was modest as these beverages account for less than 10% of the brewer’s sales volume, according to UOBKH.

“Depending on the sales volume and competitive dynamics, the industry would have sufficient pricing power to implement a modest price hike after June 30. Brewers are likely to pass on costs, hence restoring their margins,” it said.

But, Essaadi, still remained leery on the outlook, stating that it hoped to do better this year and perhaps pick up some market share. “We will be having more brand portfolios, but we will also take of those that are not doing well,” he noted.

1 Апр. 2016



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