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. ...
Beer Business Asia #2-2016
Analysis of beer market in China
China’s transition to a “new normal” reality backfired on the brewing industry unexpectedly. Stagnation and subsequent market decline resulted from dynamic social and economic changes. There has emerged a “two speed” market where the medium class significance is growing, yet the share of main beer consumers, “blue collar” is decreasing. Also the inflow of consumers is shrinking, as demographics stopped being a growth driver. Finally, beer is giving way to other alcohol drinks.
However, these problems have a bright side – they cause fast premiumization and beer market diversification. Companies improve their product mix, develop and create new growth points. Driven by westernization wave, international brands, import and craft beers are rapidly gaining weight. In such conditions, the market leader share, namely CR Snow and international companies’ AB InBev and Carlsberg Group is increasing.
Part 1. Beer market – perfect storm or fundamental changes?
Beer and Economy
Beer market performance
• Production and sales
• Prices and market by value
• Market segmentation
Who and how much drinks beer in China?
• How often do Chinese drink beer?
• Age and beer consumption
• Gender and beer consumption
• Income and beer consumption
• Alcohol and social adaptation
• Employment and beer consumption
“Two speed” market
• “The black box” of the Chinese market
• Why is Wang Yong drinking less beer?
Beer among other alcohol drinks
• Do the Chinese drink a lot of alcohol?
• Do the Chinese drink a lot of beer?
• Alcohol consumption structure
• Beer vs Liquors - pressure from two sides
• Beer vs Cocktails – fashion takes toll
Chinese craft beer
Part 2. New reality for brewing companies
Conclusion for Part 1
The Chinese market decline is caused by fundamental factors. The core of active consumers is approaching the “demographic pit” that is, their number is simply decreasing. And this factor will be effective for the next 10 years.
As a result, the brewing industry is losing its positions in the alcohol market. On the one hand, there is the nation ageing and increase in strong drinks consumers. On the other hand, the population that has entered the older age category of liquor drinkers from the beer consumers’ category was not offset by the same number of youth, in other words, beer consumers’ group decreased numerically. The youth group, that is not so big in number, is increasingly interested in bottled cocktails, which are beer alternative. The negative influence on Chinese brewers is exerted also by import beer sales increase.
As for the volumes, the key negative effect on the beer market was obtained from the structural changes in the Chinese economy. They concerned the sensitive branches and groups and inner migrants in the first place. Their incomes and sense of security to a large extent determine the consumption dynamics of affordable mass brands.
The fluctuations in 2013-2014 were accidental and in mainly depended on weather. In 2016 heavy rains could not seriously affect beer sales and production in the first year half, but will substantially influence brewers’ performance in the second year half.
Thus, so far there is not much ground for optimism in outlooks of beer consumption volumes. But its development is progressing in the quality direction, that is, market premiumization is increasing, the craft movement is setting in, and E-Commerce is developing.
Conclusions for Part 2
Judging by leading companies’ reports and NBSC data, we can see, that the market consolidation is going on. The share of the leading five in 2015 grew by 0.7 p.p. to 73.3%. Yet the consolidation rate lost momentum. Previously, the process was driven by acquisitions and now by reduction of sales of independent regional producers.
At the brands level, the consolidation looks as follows: international brands sales are growing and exert pressure on major national brands in urban China. But resulting from the market premiumization, and marketing activity, the production mix is improving. Within sales of national brands, there is a share growth of “special” sorts in medium-priced segment, while the share and sales of “usual” economy sorts are falling. Likewise, the share and sales of the regional brands are falling, excluding those by several companies with a progressive marketing policy.
However, as the experience of other countries shows, in such conditions, the regional companies can develop only in case of distancing from the mass product, for example, promoting “beer patriotism”, selling draft fresh beer and/or unfiltered beer, and trying to work on craft format, etc. Such reformation can take several years, during which “others” share is likely to drop.
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21 Сен. 2016