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3-2019

Russia: Positions of Brewing Companies

The 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 brands

In 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 2019

During 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.

Malaysia. Cheers to brewery stocks, shares rise on price increase

Brewery stocks advanced on the back of a price increase by an average of 2% to 2.5% effective July 1, 2016.

Carlsberglat

This was a result of the expiry of the Anti-Profiteering Act on June 30, where both brewers reported a price adjustment that resulted in a hike of 2% to 2.5% in average selling prices (ASPs).

Heineken Malaysia Bhd reported a higher increase in ASPs of 2.5% while Carlsberg Brewery Malaysia Bhd’s ASP increase was at a lower 2% quantum.

Carlsberg’s stock was up 14 sen at RM13.72 while Heineken was up 48 sen at RM16.68 yesterday.

CIMB Research noted that this was not a surprise given that both companies have not passed on any goods and services tax costs since the law’s implementation, while the recent 2% to 5% price hike was solely to account for the 10% to 12% hike in excise duty back in March.

Carlsberg currently holds an estimated 40% of Malaysia’s malt liquor market (MLM), with its range of beers including Carlsberg and Asahi.

Meanwhile, Heineken has the larger share in Malaysia with its products consistently holding a 60% share of the local market.

“In our view, a 2% to 3% increase is fair, as brewers have been absorbing additional cost from GST since April 2015.

“However, we opine that the net impact on earnings from the increase should be minimal in the short term but positive in the long term.

“In the near term, we expect MLM volumes to be to some extent negatively affected, as consumers may opt to reduce consumption from the price hike.

“However, MLM volumes are set to recover once consumers adapt to the higher prices, as we believe demand remains inelastic,” said CIMB Research.

CIMB Research said based on its channel checks, price increases varied for different products for both brewers.

It said the quantum of ASP increase was dependent on various factors including the amount of cost previously absorbed.

“On average, products with lower MLM volumes and lesser alcohol content have had lower increases in prices.

“In contrast, high-volume products recorded higher price increases, likely due to inelastic demand for its mainstream products, which have alcohol content of 5% and above,” said CIMB Research.

CIMB Research is of the view that this development is a long-term positive, as it expects MLM volumes to recover whilst consumers adapt to the higher prices.

Thus CIMB is raising financial year (FY) 2016 to FY18 earnings by 2.6% to 3.1% and 2.1% to 3.5% for Heineken and Carlsberg, respectively.

It is maintaining an “overweight” call on brewers and believes that earnings will continue to be driven by an inelastic demand for alcoholic drinks as well as internal efforts to increase operating efficiencies.

Its top pick for the sector remains Heineken for its diversified product portfolio as well as dominant market share in Malaysia.

It has a target price of RM16.60 for Heineken, and a “hold” call on Carlsberg with a target price of RM13.60.

7 Июл. 2016

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