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. Kingfisher Beer in more trouble as RBS plans to stop services in Europe
This has forced Kingfisher Beer Europe Limited, owned by Mallya through a complex web of entities, to look for alternative avenues to replace the credit line and other banking facilities provided by RBS.
Mallya-led UB Group runs its overseas brewery business through California-based Mendocino Brewing Company, which sells a number of beer brands including Kingfisher in the US, while operations in other countries are conducted through wholly-owned subsidiary United Breweries International (UK) Ltd and a step-down unit Kingfisher Beer Europe Ltd (KBEL).
Mendocino has got Mallya as its chairman and is owned by his UB Group through a complex shareholding structure. He has tried to keep the foreign operations separate from his troubled ventures in India, where a major controversy has broken out ever since he left the country amid growing clamour for recovery of dues totalling over Rs.9,000 crore of the long-grounded Kingfisher Airlines.
Mallya and his group firms are also being probed by multiple regulators and agencies including Sebi, Enforcement Directorate (ED) and SFIO (Serious Fraud Investigations Office).
As he has been evading repeated summons issued by ED, the government has now suspended his diplomatic passport.
In disclosures made to the US markets regulator, Mendocino said the Royal Bank of Scotland Commercial Services Limited (RBS) had provided an $2.8 million revolving line of credit over a decade ago in April, 2005 to KBEL. The credit line carries an interest rate of 1.38% above the RBS base rate and a service charge of 0.10% of each invoice discounted.
However, KBEL received a notice late last year from RBS regarding the bank’s intention to terminate the credit line with effect from 26 February, 2016. RBS also informed KBEL of its intention to terminate all other banking services it was providing to the company, with effect from the same date.
RBS subsequently extended the termination date to 29 April, 2016. In a regulatory disclosure, Mendocino said, “On 29 March, 2016, KBEL received a further extension of the termination date to 31 May, 2016.
The amount outstanding on the credit line as of 30 September, 2015 was approximately $813,900 (over Rs.5 crore).
“KBEL is in discussion with third parties to find alternative financing to replace the credit line and other banking services presently provided by RBS.”
In another filing, Mendocino said, “We have engaged in discussions with a bank which provided an indicative offer to provide a replacement for the RBS line of credit.”
“If KBEL does not finalize such alternate financing and provision of banking services, and if KBEL is unable to find a substitute replacement before termination of the RBS facilities, this would have a material adverse effect on KBEL and the company,” it added.
18 Апр. 2016