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. ...
Beer market of Kazakhstan acquired both traits of East European countries and South Eastern Asia taking a transitional position between them by many criteria and consumption style. Yet there is a positive trend in beer production which differs Kazakhstan from most of the neighboring countries. The market has remained consolidated in the hands of two international players because of its small size. However, it faces dynamic processes such as fast growth of draft beer sales, up and downs of regional companies and Carlsberg Group’s ultimate expansion. Excessive mainstream segment has declined over the recent years, yet, Zhigulevskoe and national brands with regional links have yielded their positions to a range of new products. In our review special attention was paid to regional analysis of the markets. In 14 regions of Kazakhstan we compared the companies’ positions, the market price segmentation and DIOT channel development. Besides we have compared the beer market of Kazakhstan to neighboring countries. ...
Analysis of import beer market in Ukraine. Beer Business 1-2014.
Ukraine imports about 47 mln liters of beer which forms the market as big as $150 mln and gives foreign providers about $48.4 mln revenue. It should be also said that the import beer market incorporates about 150 beer producers who are represented by at least 250 brands. The beer import includes two major and quite different segments. Beer from neighboring countries, that is medium price and premium brands by Russian companies. They contribute to the weight of the physical terms. But the market is dominated by a host of premium and superpremium brands from far-abroad countries which account for 70% of the market by value and 50% by volume.
Ukrainian import beer market has periodically experienced volume shifts in the first place due to Russian deliveries. Such fluctuations were mainly caused by various level of foreign suppliers activity, initially non-official importers and then Russian subdivisions of international companies. Similarities in brand perception, advertisement attainability and open boarders for population prepared the ground for successful launching of many brands popular in Russia. Before starting a local production, it was reasonable to offer an analogue imported product.
For instance, the brisk growth of beer import after the recessionary year 1997 was practically fully provided by Russian production. In 2003-2005, when the beer import reached its local maximum of 30 mln l, the share of Russian brands in it exceeded 90%. The major and the most successful import and eventually license brand was beer Baltika which at that time constituted the bulk of import to Ukraine. The brand production transfer to Ukrainian subdivision of Carlsberg Group (then BBH) led to an abrupt fall of the import in general.
Thus, in 2006 the foreign deliveries decreased twofold despite the dynamic growth of the beer market. The decrease went on also in 2007, while Ukrainian market and population welfare reached its ceiling. At the same time, due to the fast increase of the consumer activity there appeared an uptrend of import from far-abroad countries. By that time many beer lovers formed the conception that beer produced under a license is inferior in taste and quality to a product brought from the country of source.
The economy recession that started in 2008 caused gryvna devaluation, which sharply reduced the profitability of any business based on the import. The sales fell substantially. The breathtaking growth early in 2008 was substituted by equally breathtaking fall at the year end, though the results of the year were positive due to the pronounced seasonality of beer sales. The import in 2008 grew 2.3 times and the import share of expensive beer from far-abroad countries attained a half of the total supply volume.
The year 2009 gave the full view of recession consequences, i.e. the import of inexpensive Russian beer and expensive beer from EU fell substantially, while more affordable Russian brands experienced the fall to a lesser degree. This process matched the changes in the price segments of Ukrainian market and the regime of consumer economizing.
The steady recovery of the economy as well as stronger and more stable gryvna and the concurrent growth of population purchasing power brought the uptrend of beer import back to life in 2010. At that time the main contribution into the increase of Russian beer deliveries was made by the brands of the merger of Efes and SABMiller. Despite their affordability, they were positioned in the premium market segment, which started developing rapidly. The sales of superpremium international brands were also growing, both due to portfolio expansion of the brewing companies represented in Ukraine and to the activity of independent importers. Network retail at their end also strived to create a greater variety of marginal sorts, trying to satisfy beer lovers with higher demands.
Owing to this trend in 2011-2013 the sales growth of import beer resulted from both the formed core of major import brands, and a variety of new beer brands, which were practically unknown to Ukrainian consumer. The stronger loyalty to the brands with broad distribution, which had been already popular as well as the interest to new specialties led to fast growth of import beer weight in the total volume of beer consumption. The import market share by volume increased against 2010 from … to …% and from … to …% by value.
Historically, further market development will in the first place be dependent on the stability of Ukrainian economy. The main factors here are purchasing power of the population, gryvna rate and the activity of importing trade companies. By the beginning of 2014 these economic conditions became pronouncedly negative owing to the broken out crisis in politics and economy. The population income went down, many people started economizing and gryvna devaluated sharply.
The market recession will be opposed by the trend of market polarization, resulting from weaker loyalty to the mass brands and consumer rationality. Many import brands at their end have won loyal consumers and many beer lovers opt for new products on the market. Development of beer HoReCa establishments plays an important role too, especially those with geographic identity.
In our view the sale growth of beer from far-abroad countries is connected to
the formation of several consumption types, which however do not run counter to
each other and can overlap.
The prevailing consumption type is based on comparatively broad distribution and
the traditional image of big import brands. Beside palatability, the image is
formed by price (higher than the license brands of Ukrainian production), years-long
presence in retail and HoReCa. We should also note that the big brands belong
to major international companies and importers who can manage logistics and provide
for adequate communication with consumers. To sum up: the first level of consumption
is import brands from TOP-30 and the consumers who look to the product image.
However up to now the import beer market has been growing ever more fragmented.
While in 2010 TOP-10 brands accounted for …% of sales, in 2013 this figure went
down to …%. Unsophisticated consumer finds it ever more difficult to orient himself
in the wide variety of sorts represented on supermarket shelves.
This makes it possible to speak of the growing significance of the second consumption
type. It targets the curious character of those beer lovers who “collect” its
flavors and are willing to share their impressions with others. Their contact
with a brand often takes place via word of mouth and the internet. The developed
distribution of a brand as well as its advertisement goes to the wayside to a
sophisticated beer consumer.
One more group of import buyers is being formed by a small group of people who
have been to EU countries, tasted local sorts and brought home their impressions
on them and prefer these foreign brands in Ukraine.
According to the official statistics in 2013, 46.6 mln liters of beer were imported to Ukraine which is 17.5% (or 7 mln liters) more than in 2012. In monetary terms the volumes of foreign deliveries increased by 24.7% (or $9.58 mln) to $ 48.38 mln.
The share of import beer by volume increased by … p.p. in 2013 and reached …%.
Basing on the retail price and the geographic position, the import beer market can be divided into three segments and two directions. Medium price and premium segments are represented by beer from neighboring countries, that is, from Russia and Belarus, which is an alternative to Ukrainian mainstream. Beer from other countries of the world, mainly EU, is much more expensive than most of Ukrainian licensed brands and belongs to premium and superpremium segments.
If we speak of physical volumes, we have to say that Russian and Belarus beer forms almost half of sales, as these two countries in 2013 accounted for 22.2 mln liters of beer while far-abroad countries imported 23 mln liters.
If we base our calculations on retail price data from independent companies, the import beer market with the above stated natural volumes has the monetary value of 1.21 bln grn. ($150 mln), and its share in Ukrainian total beer sales amounts 4.6%. That is, the market share by value is … times more than the market share in liters. Against 2012, import beer grew by … p.p due to dollar rate strengthening and consequent price rise of import beer.
The only economy import brand on Ukrainian market is beer “…” by Carlsberg Group, which is supplied by an independent importer. For this reason the share of economy segment (beer having the average price up to 10 grn. for a liter) is negligibly small.
The net beer sales of medium price segment (10-14 grn./l) have been relatively stable over the last years so there was accordingly shrinkage of its share in the growing import. But the relative stability of sales conceals a significant change in the supply structure. The sharp import drop of Efes brands in 2013 resulting from the launch of their local production, was fully compensated by the growth of inexpensive Belarus beer.
The premium market segment (14-24 grn./l) contains several major brands by Russian production. There appeared a downward trend, but Carlsberg Group reacted by offering two new specialties Baltika #7 and Tuborg in a liter can. Besides, large volumes of beer Trehsosenskoe by an independent Russian brewery appeared on the market. This led to a notable increase of premium segment in the total import, despite the delivery stoppage of Stariy Melnik by Efes.
At the same time the superpremium segment (more than 24 grn./l) which is represented mostly by EU production, continued growing dynamically having reached …% of beer import. Stronger popularity of world brands by international companies as well as greater variety of expensive beer fueled this growth.
The division of import beer market by package type reveals absolute domination of packed beer. The share of beer in keg decreased from …% in 2010 to …% in 2013. This is connected to practically unchanged volumes of draught beer import against the background of the growing deliveries of packed beer. Notably, virtually all beer in kegs comes from EU countries.
In its turn, the import beer in PET is fully represented by medium price Russian and Belarus brands. While till 2012 the deliveries of beer in plastic bottles were increasing rapid, in 2013 they fell notably. The dynamics was the direct reaction to Efes activity which was saturating the market with its production expecting the launch of the local production.
The share of the canned import beer is increasing due to fast delivery growth from both Russian and EU. An important role here was played by company Carlsberg which today is actively promoting a new for Ukrainians package type, namely one liter can.
The dynamics of import beer sales in glass bottles was also uneven, though without such a sharp sales slowdown as of beer in PET and accordingly, without even sharper decline of delivery share. The transfer of Efes brands production to the local markets was partially compensated by sales growth of expensive beer from EU.
According to the data of customs statistics, granted by 1 Mosinfo, beer producers from Russia and Belarus in 2013 made … mln grn. ($... mln) out of deliveries to Ukraine, of which … mln grn. ($... mln) went to Russia, while Belarus accounts for … mln grn. ($... mln). At the same time, producers from far-abroad countries , according to the data of customs statistics, earned about … mln grn. ($... mln). Thus, the profit of the importers amounted to about … mln grn. or $... mln.
The profitability in the import beer segment from near and far-abroad is quite different. Russian providers on the average made $... for 1 beer liter delivered to Ukraine, and Belarus providers got $... . While the producers from far-abroad countries on the average got $... for every sold beer liter. Herewith, the revenues form selling beer from far-abroad, converted into a sold beer liter, of distributors and retailers is … times bigger than that from selling Russian beer.
Consolidation of import deliveries in the main geographic segments differs considerably. Import from the near-abroad is represented by several companies’ brands. Before 2013 almost all deliveries were done by Russian divisions of Efes and Carlsberg Group. Moreover, Efes share in the total volume of eastern deliveries comprised nearly …%. In 2013 the situation took a twist. Efes focused on the production rather than on import, but the volumes of beer import from Russia did not decrease. This position was filled by Carlsberg Group and AB InBev that employ similar strategy for new product and package types launching. Besides, quite a significant role was played by plant … as well as by … providers, mostly … and Carlsberg Group division. All in all 13 companies from Russia and Belarus deliver beer to Ukraine.
At the same time the deliveries from far-abroad are very fragmented, thus …% of the total volume is divided among … international groups containing … separate enterprises. Their production is bought by independent importers and those who conclude contracts for beer distribution in Ukraine (for example production of Warsteiner Brauerei and Bavaria). One of the major importers, which is constantly raising its deliveries of Belgian and German beer, is still AB InBev. Besides, there is a weight growth of Oasis group which has big experience of import beer distribution on Russian market. One can also observe constantly growing and so far little known in Ukraine producers, who supply relatively small volumes of beer. Certainly, the key role in this process is given not to foreign producers but to distributors. On Ukrainian market there are currently about 150 producers from far-abroad countries, including brewers providing quite modest import volumes.
Beer from near-abroad countries
The structure and dynamics of beer deliveries is defined by branding activity of the international brewing companies. Before launching local production of brands presented on Russian market, that have been imported for quite a long time so that Ukrainian consumers get used to it. Sometimes inofficial deliveries by big distributors dealing with imported beer precede it.
For example, beer Beliy Medved in 2011-2012 was the leader of import deliveries, but first in 2013 it started being supplied directly from Russian division of Efes company to Ukrainian one. The same happens to other company brands, that is, beer Stariy Melnik, Miller Genuine Draft and Gold Mine Beer, which in 2013 also occupied leading positions in the import segment.
In 2013, other international companies employed a similar scheme for new products launch to Ukrainian market. AB InBev enriched its portfolio by international brand Bud, which quickly took the lead in the segment having accounted for …% of total deliveries and …% of deliveries from Russia.
Last year two brands which have been long present on Ukrainian market joined the leaders of Russian import. An unusual for Ukrainians one liter can is being tested by Carlsberg Group with brands Baltika #7 and Tuborg. Beer in such format debuted in Russia four years ago and turned out to be a good alternative to PET, as it allows to retain the attributes of brand premiality and to obtain lesser price.
Similar reasons for import deliveries guided group Oasis, whose Russian division of Moscow Brewing Company (MBC) supplies beer Zhiguli Barnoe in cans to Ukraine. The brewery in Radomyshl where this brand is packed in glass bottle, probably does not have a can filling line. Besides, late in 2013 MBC started importing brand Khamovniki, which due to its clear to Russian beer lovers history, style and form has quickly won popularity in Russia in the premium segment. In Ukraine Khamovniki will probably become a superpremium brand. Company Oasis possibly also has serious plans for the brand sales in Ukrainian market. On the one hand, the successful launch in Russia did not demand great promotion budgets, and this is a good precondition for a start. On the other hand, Khamovniki does not have a distinct geographical identity for Ukrainians unlike for Moscow dwellers.
Beside Russian beer in one liter can, Carlsberg Group has recently begun distribution of Minskoe Zhigulyovskoe by Olivaria, its Belarus subdivision. Food products from Belarus are often considered to be more natural and wholesome than home produced ones, so obviously the same image is applied to Belarus beer. This factors, as well as popularity of retro sorts multiplied by the distributing capacity of Carlsberg Group were probably the precondition for market piloting. Rather big volumes of Minskoe Zhigulevskoe were delivered, which put this sort to the … place among all import brands and the … place among brands from far-abroad countries. However, since August the delivered of Belarus version of peoples’ beer have been cut off, and it is still not clear, whether they will be resumed.
Besides, 2013 saw Trekhsosenskoe arrival at supermarket shelves. This brand, produced by the same-name plant in Ulyanovks region, has quickly won the space in network retail outlets due to its taste and comparatively low price as well as its original design and the activity of the independent importer. Basing on the starting conditions and sales dynamics, Trekhsosenskoe can be called one of the most successful launches among the import brands, which do not belong to international companies. By the year end, its share in the import segment equaled …% and …% among Russian brands.
The ... position in the rating of near-abroad brands was occupied by the title brand by Belarus company Krynitsa. In Belarus most of brewing companies joined transnational groups. However, one of the biggest companies in food industry company Krinitsa remained under state control and became a power engine of Belarus beer export. The government of Belarus is constantly seeking sources for currency reserves replenishment, which in the conditions of command economy means forming plans of export for Krynitsa and stimulates the enterprise to work actively on Ukrainian market.
Brands by Krynitsa already entered Ukrainian market during the post-recession period, though after a considerable rise in distribution, the deliveries began to shrink gradually. The new wave of Krynitsa import growth started in 2012, and in 2013 the deliveries were growing rapidly, among other drivers, due to number of suppliers increasing. Moreover, the range of Belarus company was restructured, for instance, brands Kult and Alexandria almost disappeared from retail outlets. The bulk of sales is provided by two main sorts of the title brand, that is, Klassicheskoe and Exportnoe. Kiev company … (…) is responsible for the national distribution of the brand.
Thanks to the same distributor, an important part in the import beer segment is played by a range of brands by Baltika. The biggest brand among those belonging to Russian company in the portfolio of … is the only import brand of the economy segment, namely … . But the company also supplies brands by Carlsberg Group which correspond to Ukrainian mainstream segment, that is Zhigulyovskoe, Don and Yarpivo, and to the premium segment, namely, Old Bobby and Nevskoe as well as superpremium Asahi Super Dry.
Ukrainian market contains about ten more brands, supplied from Russia and Belarus. However, their weight in the segment of import beer is quite small. Besides, in retail one can also see Armenian beer Kilikiya at a price which refers it to the superpremium market segment. Its sales are steadily small totaling … liters per year.
Beer from far-abroad countries
AB InBev has been the absolute leader in the segment of beer from far-abroad countries for many years. The bulk of import is formed by two Belgian brands, namely Hoegaarden and Leffe, that are officially supplied from Belgian subdivision of AB InBev company to its Ukrainian subdivision. The beer is delivered in kegs, glass bottle and can unlike Russia that receives only draught beer and packed beer is produced under a license at Russian capacities.
Unfiltered beer Hoegaarden with coriander and orange zest is an unusual specialty for AB InBev which targets the mass sector in Ukraine. One can notice that Hoegaarden import is increasing dynamically and the share of the brand in the total volume of import beer reached …% in 2013, as its volumes grew faster than the far-abroad import on the average. Due to …% growth brand Hoegaarden reinforced its first position in the list of leading importer from far-abroad countries.
Traditional Belgian brand Leffe also belongs to international variety of AB InBev but in Ukraine it takes up narrower market share than Hoegaarden. Until recently, it occupied the … position on the market of far-abroad beer, but in 2013 it yielded its position to …. However it has no relation to volume cuts as Leffe beer deliveries grew by …%.
The success of Belgian sorts of AB InBev results from their long-term presence on the market. Hoegaarden and Leffe have been widely represented in retail for about ten years. The brand can be found practically in half of all outlets where the production of AB InBev is traded. Weighted national distribution of beer Hoegaarden amounts to …% of the retail and that of Leffe reaches about …%. And the retail price of the brands is nearly … grn. for a liter, which approximately corresponds to the price levels of the major competitors, namely beer Heineken, Krusovice and Paulaner.
Owing to the considerable volumes of the brands deliveries Hoegaarden and Leffe account for nearly …% of all Belgian import.
Besides, remarkable contribution into the superpremium portfolio of InBev as well as into the segment of Belgian beer was made by import version of license Stella Artois. Unlike its Ukrainian analogue, Belgian beer is packed into the original bottle of 0.75 l and differed in design. However, by 2013, the interest to the new specialty weakened considerably.
In summer 2012 Ukrainian subdivision of AB InBev significantly expanded its premium portfolio and reinforced its positions on the import beer market, by organizing import deliveries of several popular sorts. Naturally the choice of the brands was not random, as all of them are produced at German breweries of the company.
Beer Beck’s beside the license version was represented in non-alcohol type Beck's NA in glass bottle of 0.33 l.
Popular Munich beer Franziskaner was not well known to Ukrainians until 2012. AB InBev brought two most known sorts to the market. They are Franziskaner Hefe-Weissbier Naturtrub (light, wheat, unfiltered), classic “white” beer in bottles of 0.355 l and 0.5 l; and cans of 0.5 и 5 l as well as Franziskaner Hefe-Weissbier Dunkel (dark, wheat, unfiltered) in glass bottle of 0.5 l. One can say that Franziskaner has found its consumer, though it has not won a great popularity, as in 2013 its deliveries remained nearly at the level of 2012.
The last year either did not bring a breathtaking success to other Munich brands, namely Lowenbrau and Spaten. In 2012 beer Spaten was represented by light sort Premium Lager and dark Spaten Optimator in glass bottle of 0.335 l. Obviously, these brands did not win the full attention of superpremium beer and their deliveries in 2013 were … . It may be that classic German design was not impressive enough for supermarket shelves in Ukraine. Unlike Franziskaner with its authentic monk on the label.
Heineken is the second far-abroad company by the total volume (… mln l) of the represented brands. The growth against 2012 equaled nearly ..% which is … as big as the average dynamics in the segment. Certainly, the rapid growth is mainly connected to the world popularity of the brands and absence of production capacities. But in Ukraine there is no business representative of the company either, so the beer deliveries are organized by unofficial distributors working in the superpremium segment.
Currently, more than …% of beer sales by Heineken breweries are accounted by company’s two major brands, i.e. title Heineken and Krusovice. Though a row of smaller brands of the company have also made a big contribution into the positive dynamics of the deliveries.
In recent years, 2-3 large companies dealt with Heineken beer distribution. Until 2013 the main importer was Kiev firm …. Beer in kegs for HoReCa was bought from Brau Union International (Austria) and packed Heineken beer was bought in Holland. One can say that … played a major role in brand Heineken popularization and provided for steady growth of its sales. However, in June 2013 Heineken started massive deliveries to Radomyshl, belonging to Oasis Group (in alliance with Persha Pryvatna Brovarnia) and in July deliveries to … company were ceased.
Obviously, Oasis reached agreement on exclusive rights for Heineken beer distribution in Ukraine. Though small volumes of this beer are still purchased by firms involved in duty-free trade. Additionally, deliveries from Austria were cut as early as in Autumn 2012, so all beer that was imported by … company and later by Radomyshl, was brought from Heineken Brouwerijen, Holland.
However, excluding Heineken from company … was compensated by other big brand belonging to Heineken, beer Krusovice.
Big deliveries of Krusovice started during the after-crisis period and the brand rapidly won popularity in Ukraine, thanks to wide representation in retail and HoReCa. Distribution of Krusovice was actively carried out by large company importer .. (… since June 2011). The company managed to put the brand on the third place among the leaders from far-abroad companies and to provide for ..% of deliveries in the segment. However, appearance of many other brands led to successive decline in sales and market share.
In 2011 company … joined in the distribution of Krusovice and initially supplied beer alongside with … . But since 2013 company … obviously got exclusive rights for Krusovice import, as deliveries to other distributors ceased. By the end of 2013, there was …% growth of the brand import, which can be explained by a recovery after the transition period.
Finally, let us mention that by the end of 2013, the deliveries of almost all Heineken brands to EU countries, excluding the title one, have been made by company …. They include such world-famous sorts as Gosser, Newcastle Brown Ale, Zipfer, Murphy's Irish Stout and others. Zipfer experienced supply growth after shortcuts in 2012. Obviously it resulted from redirecting of import flow to the advantage of a single distributor.
Carlsberg Group subdivisions in Ukraine as well as their main competitors are affected by market recession and polarization. The adequate reaction to these conditions is focusing on premium and superpremium segments, which suggests weight and number increase of import brands. Though in selling beer from far-abroad Carlsberg Group faced difficulties and did not manage to succeed.
Currently, the main import brand in the portfolio of the company is still Mexican beer Corona Extra. Despite its world-wide popularity, Corona is bottled only in Mexico by Grupo Modelo capacities.
In 2009 Carlsberg and Corona concluded a contract for Corona beer distribution in the countries of Eastern Europe and its sales on Ukrainian market skyrocketed. In 2010 beer Corona accounted for …% of all import deliveries from far-abroad countries and the brand took the … position in the list of leading brands.
But shortly after the contract conclusion, Corona Extra changed its ownership. Company AB InBev owing to its reconstruction became the owner of 50% of the shares of Mexican producer, which had been purchased by Anheuser-Busch, and in July 2012 Grupo Modelo went under the control of AB InBev completely. Corona Extra became the third key brand, which forms the global portfolio of AB InBev.
One cannot say that this brand is of crucial importance to Carlsberg as in Ukraine the market share of Corona Extra equaled one tenth of one per cent in summer 2012 and by the year end the share started decreasing. It was also the time when the brand reached its peak of Ukrainian deliveries volumes, that is … mln l.
But Carlsberg remained the exclusive distributor of the brand “We have signed a contract for more than a year on Corona and Negra Modelo deliveries. Grupo Modelo can not breach it unilaterally, while we fulfill all our obligations, so nothing changes for us so far”, - Petr Chernyshov, former chief manager of Carlsberg Ukraine said to the Kommersant. However, in 2013 the deliveries of Corona to Ukraine fell by …%, and the deliveries of Negra Modelo decreased more than …, despite the growth of import segment.
Obviously, transition of Corona distribution under the control of the local AB InBev subdivisions is a question of some time. Most likely, in the nearest future, Corona will occupy the upper segment of AB InBev variety (which means it will not get cheaper) and probably increase its market share substantially.
Agreement that Carlsberg Group signed in 2011 with Diageo concerning its brands distribution was very important for reinforcing of Carlsberg Group positions on the market of expensive beer. The group dealt with deliveries of Diageo production in many European countries, which determined the choice of partner in Ukraine. According to the contract, Carlsberg became the exclusive distributor of the key brands by British company, namely Guinness, Kilkenny and Harp.
We have to say that in 2010, virtually all deliveries consisted of Guinness Draught and Guinness Foreign Extra Stout (packed). They have been quite well-known to the sophisticated Ukrainian consumer since early 90-ies, which by itself was a good precondition for successful development. Beer lovers appreciated its belonging to Irish culture that was gaining popularity. That is why the brand formed a special image even before wide popularity in Ukraine.
As early as 6 months before official deliveries started, beer Guinness stopped coming to Ukraine and gradually left retail shelves in packaged format and bars in draught format. Carlsberg Group began importing new for Ukraine sort Guinness Original. Thus, two different flavors of beer Guinness were not present on the market at the same time.
A year after sales start, Carlsberg Group reported its success in brand distribution. In June 2012 Guinness was sold in 774 outlets in the sector of HoReCa in packed form and in 209 in kegs. As for the key retail, here the distribution included 1348 outlets. Under our estimation, basing on “1 Mosinfo” over the year the brand deliveries nearly …, the brand took the 11 place in the rating of sales leaders from far-abroad. It is quite a good result for a beer costing much more than other import European brands.
The end of 2011 was also marked for Carlsberg Group by the contract with Warsteiner Group on distribution and common promotion in Ukraine of beer Warsteiner Premium Verum and Warsteiner Premium Fresh. Probably, such decision was taken by independent German company not only to order deliveries but also due to smaller sales of the popular brand in 2011. In March 2012 beer supplies to other importers were ceased, except for the companies involved in duty-free trading.
Initially, the partners tried rather unusual experiment. It was decided to brew import beer at the plant of Warsteiner Brauerei in Warstein (Germany) and to deliver it to Ukraine in container tanks on a special beer carrier, which belongs to the producer. In Ukraine beer would be bottled at Kiev and Lvov breweries of Carlsberg Ukraine under the control of brewing master from Warsteiner Group.
Indeed, about … l of beer in 2012 and … in 2013 were brought from German plant in containers with the capacity of 23 000 liters of beer. As we can see, it formed the bulk of deliveries in 2012 and about a third part in 2013, when the main volume was imported in glass bottle or can. Despite the innovations in the delivery organizations, by the year end Carlsberg cut the import of Group Warsteiner.
In summer 2012 Carlsberg Group launched a new project, safe from the viewpoint of rights for the brand. The company started importing Belgian brand Grimbergen, produced at French brewery Kronenbourg, which belongs to Carlsberg Group. The stake was probably placed on beer lovers’ interest to new products and wide distribution net of the company. However, unlike many other brands, this beer was absolutely unknown to Ukrainian consumer, while its price was much higher than that of many European brands. As a result, in 2013 the deliveries and the market share of Grimbergen halved. Yet, regarding the minimum costs on the launch, this project cannot be considered unsuccessful. Under our evaluation, over the two years, the sales reached about … mln grn. and the importer made nearly … mln grn..
Nearly one third of beer imported into Ukraine is produced at independent breweries in Germany. The biggest German brand in 2012 quite unexpectedly became beer Kaiserdom by the same-name company. Only four years ago Kaiserdom rated … in the list of the leading brands from far-abroad countries and in two years it doubled its share in the segment having occupied the 5 position. Such rapid growth resulted from rather democratic price for German beer, fast expansion of distribution, good shelf positioning and original package format, i.e. 1 liter. Such effective combination became possible due to joining importer, distributor, and trader in one organization, namely retail network ATB (till June 2012 affiliated company Quarto-Union).
In 2013 Ukraine received … mln l of wheat beer Paulaner. Owing to weak positions of wheat beer on retail shelves, Paulaner became one of the key sorts for Ukrainian lovers of “weisses”. Since early 2010 it has beer imported by firm … on exclusive basis. The company managed to raise the volumes of Paulaner beer deliveries gradually over the last four years and today it is the 8 in the rating of import brands and the 3 among German ones.
Brand Budweiser Budvar has been known to Ukrainian consumer for a long time, and many Ukrainian beer lovers associate the image of Czech beer exactly with it. However today the sales and the market share of Budweiser Budvar are not big if we compare its position with, for instance, Russian ones. The comparatively fast uplift of Budweiser Budvar deliveries in 2011 changed into decline in 2012, which possibly was connected to distributor change. Late in 2012 the import almost completely was entrusted to … (…, …). Subsequently the deliveries started growing again, and the brand restored its positions.
Beer Faxe is another comparatively inexpensive import brand in one liter can. It can be considered Danish alternative and a competitor to German Kaiserdom. Quite logically, the bulk of sales of this beer is made by a competitor of Ukrainian network of ATB, namely retailer Fozzy Group with its supermarket network Silpo. So far Faxe is more than … yields to the competitor, but over the time of its presence, the brand sales have been … and the distance between them shortens.
Among many import brands from far-abroad, let us discuss those which in our view have the potential for significant market share growth. Comparatively new for Ukrainian consumers brand Litovel by Pivovar Zubr managed to increase its market share from 0% in 2010 to …% in 2013. Its distribution is carried out by several independent importers. Another novelty of 2011 is Lithuanian beer Vilniaus, whose import has grown considerably over the last years.
Despite the significant fall in deliveries in 2012-2013, Dutch beer Bavaria is likely to have dynamic sales growth. These prospects are connected not to import but to license production at plant Radomyshl (alliance with PPB within Oasis group) started in summer 2013. Besides, … mln liters of non-alcoholic Bavaria sort was imported.
“We were lucky to find a strong partner in PPB-Oasis, that will allow expanding distribution to the level of more than 80% of the country territory, - commented on the agreement Frank Svinkels, a member of Bavaria board. He said that the brand has been retaining a strong position in the premium segment for many years.
Bavaria will create a competition for such brands as Stella Artois and Carlsberg, and the expected marketing budget can equal nearly $2 mln, as thinks Vitaliy Tkachenko, former marketing director of Obolon.
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The article materials were prepared using statistics of import supplies provided by and «1 Mosinfo» (www.1mosinfo.ru). Data from Food and Agriculture Organization of the United Nations as well as national statistics service Goskomstat were also used in the article. A number of estimations are based on info provided by importers, producers and research companies.
The data on beer import volumes and their interpretation are our assessment based on the current trends in case the source has not been named.
We do not claim the given information to be absolutely correct, though it is based on data obtained from reliable sources. The article content should not be fully relied on to the prejudice of your own analysis.