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. Vijay Mallya’s craft beer firm brews fresh funding in US
California-based Mendocino Brewing Company, which sells a number of beer brands including Kingfisher in the US, has got Mallya as its Chairman and is owned by UB Group through a complex shareholding structure.
In a regulatory filing with the US markets regulator SEC (Securities and Exchange Commission), Mendocino has disclosed having issued a ‘promissory note’ to Delaware-based Catamaran Services, Inc, in the principal amount of $ 325,000 (over Rs 2 crore).
It further said Mendocino had earlier also issued four promissory notes to Catamaran between January 2014 and June 2015, for principal amounts of $ 500,000 each.
Catamaran’s sole shareholder is an entity named Catamaran Holdings, Ltd, which interestingly “has directors in common with Inversiones Mirabel SA”, one of the major shareholders of Mendocino.
The indirect beneficial owner of Inversiones is United Breweries Holdings Limited (UBHL), making UBHL the indirect majority shareholder of Mendocino. Mallya chairs the boards of UBHL as well as Mendocino.
Mendocino further said it has also received a letter from Illinois-based MB Financial Bank permitting the company to obtain loans up to $ 400,000.
As per the terms of the promissory note, Mendocino has promised to pay the principal sum of $ 325,000 with accrued interest to Catamaran within 6 months, subject to the receipt by the company of a bridge loan from its majority shareholder.
This repayment is subject to the shareholder loan amount being sufficient either to pay the note through ‘Permitted Payments’, or to pay both the note and certain existing obligations of the company to MB Financial Bank.
The ‘Permitted Payments’ on the note are payments made from the portion of a Shareholder Loan that is in excess of $ 600,000, the filing further said.
If the company is not able to satisfy its obligations on the note within six months, the note will get automatically extended for additional six months terms “until a Shareholder Loan sufficient to satisfy the note is received or the note is otherwise paid.”
A major controversy has broken out back in India ever since Mallya left the country amid growing clamour for recovery of dues totalling over Rs 9,000 crore of the long-grounded Kingfisher Airlines in outstanding loans and interest amount.
Mallya and his group firms are also being probed by multiple regulators and agencies including Sebi, Enforcement Directorate and SFIO (Serious Fraud Investigations Office).
Under terms of the promissory note, interest will accrue from the date of the note on the unpaid principal at a rate equal to the lesser of 1.5 per cent per annum above the prime rate offered from time to time by the Bank of America Corporation, or 10 per cent per annum, until the principal is fully paid.
The note can be prepaid without penalty at the option of the company, but can not be amended without the prior written consent of MB Financial.
In another filing with SEC, Mendocino said it was unable to timely file its Annual Report on Form 10-K for the period ended December 31, 2015 “due to delays experienced in the collection of certain financial information about the Registrant’s UK subsidiaries required to be included in the Annual Report”.
“The Registrant intends to file the Annual Report with the Securities and Exchange Commission within the 15-day extension period…” it added.
In its last annual report for 2014, Mendocino had disclosed having paid Mallya a total amount of $ 267,700 (about Rs 1.8 crore). This included $ 120,000 per year for services rendered as Mendocino Chairman and $ 147,700 by a subsidiary United Breweries International (UK) Ltd for promoting its “products in the Foreign Territory outside the United Kingdom”.
The payment to him during 2015 would be known after the latest annual report is filed later this month.
Mallya became Mendocino’s Chairman in October 1997 and also served as its CEO until January 2005.
Mendocino Brewing Company was founded way back in 1983 and it caught Mallya’s interest in 1997.
Today it claims to produce over ’20 nationally recognisable labels’, including Red Tail Ale, and the company says it has “trekked from a 1983 production of about 400 barrels (5500 case equivalent) to the current production of about 75,000 barrels (over one million cases)”.
Its North American operations primarily consist of brewing and marketing proprietary craft beers. Its foreign operations are conducted through wholly-owned subsidiary United Breweries International (UK) Ltd and a step-down unit Kingfisher Beer Europe Ltd.
4 Апр. 2016