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. ...
The global outlooks of the legal market of cannabis are excellent. It is possible to simultaneously imagine dry law repeal and craft brewing boom but not in one but in several consumer categories. For alcohol is contained in liquids and cannabis derivatives can be in three physical forms.The value of legal market of cannabis and its products can reach 10% of the world beer market in five years, and in 2030-2040 even reach the same scope provided the current rates of legalization and development of market infrastructure remain at the same level. Cannabinoids are actively integrating into the food industry from chewing gum to beverages deforming the pharmaceutical and alcohol markets, they influence the trends of healthy lifestyle and beauty. ...
China. The fight is on, for beer and noodles
What do China’s declining manufacturing sector and growing number of white collar workers have to do with the country’s largest instant noodle and beer makers?
They are changing the landscape of the country’s massive food and beverage sector by forcing key players to upgrade their product mix and improve their quality, or face being eliminated as customer expectations continue to rise in line with standards of living.
According to a report released last week by consulting firm Bain, with many manufacturing jobs moving to lower-cost Southeast Asia, Chinese brands in categories traditionally catering to blue-collar workers, such as instant noodles and value beer, are suffering.
That has partly translated into a 9.54 per cent year-on-year decline in revenue for the country’s biggest instant noodles maker Tingyi, whose share price more than halved over the past 12 months, while Tsingtao Brewery, Chinese number one low-end beer maker, plunged 42.97 per cent.
In 2015, Chinese people’s consumption volume of instant noodles slid 12.5 per cent, and by 3.6 per cent for beer, while the slow growth was fuelled by a shrinking workforce that resulted in more low-income retirees, the report said.
“As workers become richer and rate enjoying their quality of life, rather than saving for their family, as their priority, the customer base for instant noodles is only poised to become smaller,” said Zhu Danpeng, associate with China Branding Research Institute.
Since the reform and opening up in the late 1970s, China’s millions of migrant workers have accounted for the bulk of the consumption of instant noodles, commonly seen as a cheaper and faster option for the army of hard-working labourers.
Many of them decided to tolerate a lower standard of living, including dining, so as to send more money back to their family in rural areas.
“But now the dynamics are changing,” Zhu said.
“The new generation of migrant workers born in the 1990s are increasingly seeking a higher living standard, and instead of sending their wages back, they are even asking their parents for money.”
The growth of labour costs in the world’s second largest economy has outpaced consumer inflation for years, with wages now nearly four times those in Southeast Asian countries such as Cambodia and Bangladesh, data from consultancy BMI Research showed.
While manufacturing is fading out in many parts of the country due to rising wages and workforce shortages, there has emerged a vast number of white-collar workers in cities, who essentially make up China’s swelling urban middle class.
When saving is less of a concern, both the new generation of young migrant workers and the urban middle class become spenders, and apparently pickier spenders.
“Chinese people are having fewer instant noodles and less beer as they have a higher health consciousness,”said Robin Yuen, an analyst with RHB-OSK Securities.
According to a Harvard study, instant noodles could pose a higher risk of heart disease and stroke given its high sodium, unhealthy saturated fat and glycemic loads.
An excessive consumption of beer may also cause abdominal obesity in men, so-called “beer belly”, heartburn and higher blood pressure.
“Consumers are becoming pickier, and the competition in the [instant noodles] market is also intensifying,”said Alice Leung, an analyst with KGI Securities.
China’s instant noodles market, the biggest worldwide with a staggering 44.4 billion servings consumed annually, has been for decades dominated by two players: Tingyi and Uni-President, both from Taiwan and listed in Hong Kong.
Having benefited from a decades-long market boom, they are now facing an increasingly gloomier outlook as the lacklustre economy takes its toll and consumers’ preferences shift.
Tingyi, whose flagship Master Kong brand made up 55.4 per cent of the market share in China, posted a 12.69 per cent year-on-year decrease in its revenue from the instant noodles business in 2015, which helped drag its annual net profits down by a steep 36.0 per cent from a year earlier.
“Tingyi admitted its neglect of the middle class and excessive dependence on channel penetration amid urbanisation in the past,” BOCOM International analyst Summer Wang wrote in a note after talking with its management earlier this year. Wang gave the stock a “sell” rating.
“And this, in our opinion, translated into Tingyi’s laid-back attitude in innovation and made the present product upgrade tougher than expected.”
Entering its third straight year of profit loss, the Taiwanese food making giant vowed in its annual report this year to upgrade its products in “many aspects including ingredients, soups and packaging,” so as to “lead the category out of the cheap product positioning.”
A shrinking instant noodles customer base signalled that key players like Tingyi and Uni-president had to increasingly count on higher-priced products to “compensate for” the waning consumption volume, RHB Group’s Yuen said.
“And we believe Uni-president outperforms Tingyi with its better product mix upgrade,” he added.
Although still retaining the crown as the top-selling instant noodles maker, Tingyi lagged behind its rival Uni-president in cracking the upmarket, analysts said, largely due to the latter’s stellar sales of its higher-priced products over the recent two years.
Uni-president’s new product Soup Daren, targeting young consumers favouring mid-to-high-end instant noodles, had been driving the company’s better-than-expected revenue growth over the first quarter of this year, KGI’s Leung wrote in a note.
One way to alleviate consumers’ health concerns over instant noodles was to add less oil to the meat ingredient, reckoned Leung, who expected Uni-president’s lighter-tasting options to help maintain its revenue growth momentum.
However, given the consumption nature of instant noodles, the room for Uni-president to price up its products remains limited, as people might opt instead to eat out if instant noodles becomes too costly.
“The highest amount a pack of instant noodles can charge should be around 10 yuan,” said China Branding Research Institute’s Zhu.
A similar trend is also gaining pace in the country’s beer market, currently led by a few state-owned breweries including China Resources Beer and Tsingtao Brewery, as well as a flood foreign brands such as Carlsberg and Budweiser.
“The industry landscape is transforming, with the higher-end beers playing a bigger role,”said chief executive officer Hou Xiaohai of CR Beer, who co-owned the world’s largest-selling beer brand Snow with British SABMiller.
A weak economy has also weighed upon the country’s beer market as a whole, which Hou says shows little sign of recovery.
Facing the economic headwinds and shrinking consumption, the low-end beer segment, represented by Tsingtao Brewery was among the hardest hit.
For the first quarter of this year, earnings from Tsingtao dropped 4.41 per cent, compared with a year on year advance by 1.77 per cent from its peer CR Beer, whose mid-to-high-end beer contributed to roughly half of its sales volume.
The sales volume of its principal brand, Tsingtao, diminished 7.12 per cent in 2015 from a year earlier, while its share prices slumped 25.78 per cent this year through July.
“Our recent channel checks and discussions with management suggest that Tsingtao’s beer volume growth remains negative due to weak demand,” Jefferies analysts led by Jessie Guo wrote in a note.
While shrinking consumption bites into Tsingtao, CR Beer, which appears to have fared better so far thanks to its mid-to-high end Snow brand, has found itself challenged by its foreign rivals.
“We have concerns regarding further intensifying competition in the high end market as younger consumers continue to prefer foreign brands over local brands,”Anson Chan, an analyst with Daiwa Securities wrote in a note.
CR Beer’s Hou admitted that its Carlsberg and Budweiser were among its major rivals in the premium beer segment, stressing that he also pinned hopes on the company’s new “super-premium” Snow Face, a bottle of which cost over 25 yuan — more than four times more expensive than the mainstream Snow beer.
In addition, as the country’s major breweries were mostly state-owned enterprises, they tended to lose their shine to Western peers in corporate management efficiency, suggested Zhongtai Securities analyst Hu Yanchao.
“With the rise of imported and craft beer in China, the pressures on domestic players are bigger and bigger,” Hu said.
However, a coin has two sides. As Chinese people eat fewer instant noodles and drink less beer, they buy more yoghurt and even pet food, thanks to the flourishing services sector and more higher paying jobs, the Bain report revealed.
“People may think yoghurt has a higher concentration of protein and is more flavourful,”said RHB Group’s Yuen, who viewed yoghurt as a crucial profit engine for Inner Mongolia Mengniu Dairy, which beat its rival Inner Mongolia Yili last year as China’s biggest milk producer by market share.
Yoghurt, which accounted for only 14.8 per cent of Mengniu’s total sales revenue in 2014, was projected to make up more than 30 per cent of its sales over 2017, according to a RHB report.
The brighter outlook of the yoghurt market also prompted northeastern Chinese dairy giant China Huishan Dairy, traditionally best-known for its raw milk business, to shift its interest to low-temperature milk and yoghurt production.
“There are greater prospects for Huishan’s new venture in Eastern China’s Jiangsu province, as it aims to crack the burgeoning low temperature milk market in Eastern China,” according to Song Liang, an independent dairy industry analyst.
But with a sustained economic downturn, Song warned, the overall demand in the dairy industry was still “relatively lukewarm,” while the competition stayed fierce.
11 Июл. 2016