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. ...
China’s breweries expect short-term boost from European football championship
Investors are betting on Chinese breweries to score big, riding on the one-month UEFA European Football Championship, market commentators said.
“No beer, no football” and “Watch football, drink beer” are slogans used in advertisements that have already been seen everywhere in China, which boasts the world’s largest audience for the world biggest game. The one-month event will kick off in France starting Saturday Hong Kong time, with 24 national teams from around Europe competing to reach the final at the Stade de France in Paris.
“Breweries usually see their beer sales increase in the traditional peak season from June to August, not to mention during the European Championship,” Hanna Li Wai-han, a strategist at UOB Kay Hian Hong Kong said. “Speculators will certainly see the great football tournament as a new casino on expectation of a rally in breweries.”
Shares of the major breweries listed in Hong Kong jumped recently, with China Resources and Tingtao Brewery Company both gaining more than 6 per cent over the past fortnight.
“I think speculation on the European Championship is the main driver for their recent rise,” said Li. “And you may see a continuing but small gain for Chinese breweries in the coming month.”
Victor Au, chief operating officer at Delta Asia Securities, agreed, saying that the recent rise in breweries’ shares is heavily based on the “football tournament” speculation.
Au said the decline in raw material costs is also a contributing factor to the improvement of Chinese breweries’ business. Tsingtao increased its earning at 2.47 per cent year on year in the first quarter of 2016, mainly driven by lower raw material costs.
However, the top four players in China’s brewery industry, including CRB, Tsingtao, AB InBev and Yanjing, all reported flat or declining sales volumes in the first quarter of 2016, indicating market demand is still sluggish.
Data from the National Bureau of Statistics shows China’s beer market continued to decline. The full-year output of the industry was 471.6 million hectolitres (hl) in 2015, down 5.1 per cent from the prior year, and a trend that showed negative growth for two consecutive years.
Li from UOB Kay Hian warned the rally may retreat after the football games are finished, with the brewery business expected to move towards polarisation.
“The giants, with the bigger market shares in China’s brewery industry, will further dominate, contributing to product mix upgrades,” Li said. “The small brewers are likely to continue losing their market share due to more intense competition.”
The competition is fierce in China’s brewery sector, she added. Players in the lower-and-middle priced market segment are facing pressure from the giant domestic beer makers, while premium brands compete with foreign breweries, she added.
Sun Mingbo, the chairman of Tsingtao Brewery, said competition in the industry will be fiercer following moves by foreign players to increase their investment in China.
“The rapid development of surrogate products including imported beer [and] ready-to-drink (RTD) will take away some share in the domestic beer market,” said Sun a statement.
Daiwa Capital analyst Anson Chan said shifts in market share are now an important indicator of the upside for long-term operating margins. “Foreign brands are better positioned in the beer segment due to young customers’ preference to consume these types of beers,” Chan said in a report.
With intensive competition and sluggish demand, China’s brewery sector will see more mergers and acquisitions (M&As), he said. “Most domestic beer players have a strong cash balance and are looking for M&A targets. M&A remains the major swing factor for China’s brewery sector.”
However, Chan said he sees no meaningful M&A targets outside of the top five players that could stimulate volume growth because the other breweries have weak brand recognition nationwide.
Au from Delta Asia Securities agreed, saying that most industry majors are looking for M&A targets, but they have not seen many such opportunities in China’s brewery sector so far.
However, Au said he expects that the possible deal between China Resources and fast food giant McDonald’s will boost the business of China Resources Beer.
McDonald’s is targeting private equity firms, including Bain Capital, MBK Partners, TPG Capital Management and Chinese state-backed conglomerate China Resources, for its planned sale of 2,800 restaurants in North Asia, according to Reuter’s report.
China Resources Beer is the Hong Kong listed subsidiary of China Resources. Chen Lang, chairman of China Resources Beer, said in a statement that the company will “explore synergies from mergers and acquisitions”.
13 Июн. 2016