Development of small brewing in Ukraine
Suppliers of imported equipment
Perspectives
Catalogue “Craft breweries in Ukraine”

Having performed yet another spiral turn, technologic evolution of the brewing industry is coming back from the idea of industrial beer to craft beer. It certainly takes place on the new technological level, which resulted in the emergence of modern minibreweries with the production quality that can significantly exceed mass beer sorts. Similar trends are traced in many countries of the world, adjusted for general development of economics. A group of consumers who place higher demand on beer taste and quality is growing extensively in Ukraine as well. Let us try and get into the processes occurring in this segment of Ukrainian beer market.

Development of small brewing in Ukraine

Beer manufacturing by minibreweries in contemporary Ukraine dates back to 1991. The first private brewery was set up in Uzhgorod and was attached to the restaurant “Inturist-Zakarpatya”. However, in the recessionary 2008 it was closed. Altogether in the 1990-s about … restaurant and industry minibreweries* were set up in Ukraine, of which only … continue working for the present day. The majority changed their owners and were completely reorganized.

^{* Let us regard the breweries which are located at a restaurant as the restaurant breweries and the separate breweries as the industrial ones.}

The slow elevation on the market began as early as at the beginning of 2000-s but in 2007-2008 small brewing underwent a real revival, that was a period of active development of the whole Ukrainian industrial system.

The recession of 2008 slowed down the development of private brewing (which affected the indices of 2009) but as early in 2010-2011 there was a powerful spurt which at once increased the production volume of small brewing segment more than by …%.

Many investors believed in this interesting, and in case of correct planning, profitable business trend. The Law of Ukraine “On the prohibition of gambling business in Ukraine” adopted on 15.05.2009 could have played its role in the development of restaurants with their own breweries. It might have contributed to the transfusion of investments to another type of the establishments.

In 2008 … new minibreweries were put in operation, … of which are restaurant breweries. Their aggregate capacity allows to produce up to … mln l. per year.

In 2009 the majority of breweries were also set up at restaurants but with much less quantity and aggregate capacity, … units and … mln l. of beer per year correspondingly.

In 2010 the same number of small brewing enterprises were launched (or restored) as in pre-recession 2008, that is … units. But their aggregate capacity turned out to be … fold greater and comprised by now … mln l. of beer per year. It took place due to six new industrial-type minibreweries launching which allow to produce … mln l. of beer per year. The rest eight restaurant breweries are capable of producing up to … mln l. of beer per year.

In 2011 the situation appeared to be similar to 2008. 10 out of … new minibreweries were set up in restaurants and total maximum capacity of all the enterprises comprised … mln l. of beer per year.

Although single minibreweries are being closed and others are not working at full capacity, their total quantity is steadily growing. At the end of 2011 we counted … operating enterprises which can be attributed to small brewing. These are breweries with annual production volume of up to 20 mln l. of beer per year.

The increase in number of breweries and the growth of their aggregated production volume continues in 2012 году. Two minibreweries were open in Kharkov at the beginning of the year. In spring two more Ukrainian minibreweries carried out the first brewages. Their opening is scheduled for May.

Therefore, at the beginning of 2012 there are already … minibreweries, which are examined in the further survey.

In the total number of small enterprises the quantity of restaurant-type minibreweries significantly exceeds the quantity of minibreweries without a restaurant and of their own comprises correspondingly … and … units.

According to the number of restaurants with breweries the capital of Ukraine has greatly overcome regional centers. Kiev numbers … such enterprises, which makes up one fifth of all the Ukrainian restaurants with breweries. Kharkov and The Crimea have … restaurant breweries each. Donetsk and Odessa have … units each.

The comparison by the efficiency of installed equipment results in an opposite correlation due to the fact that industry minibreweries produce more beer than in restaurants.

Odessa region has the greatest aggregate capacity among industry minibreweries (…% of all the industry minibreweries), then goes The Crimea (…%) and Kharkov region (…%). Yalta brewery “…” and new Kharkov “…” are the leaders among enterprises here.

The volume of beer production was calculated in terms of available capacity and presumable enterprise work load. According to our estimation, Ukrainian restaurant and industry minibreweries produced approximately … mln l. of beer in 2011. It comprises about …% of all the beer produced in Ukraine. Besides, out of the total volume we left out such enterprises as, for example, Transcarpathian “Novotech”, Zaporozhye “Metamorphoza” and others with a capacity which allows to consider them, by Ukrainian standards, as middle enterprises, though they began their activities as minibreweries.

By value the segment of “craft” beer can comprise about …%, considering that the selling price for one liter of “live” beer is 1.5-4 times higher than the price for one liter of pasteurized beer produced by large manufacturers.

Thus, average price for one liter of such beer in specialized beer shops, according to our estimation, amounts to about $…. A liter of beer produced in a restaurant brewery costs threefold more expensive. The most popular 0.5 l. mug of beer brewed in a restaurant, will cost about $… to a consumer.

The quantity and volume of minibreweries in the regions correlate with the income and number of the population in these regions, it is not a surprise that the capital stands out among them.

Significant production volume in the Crimea and coastal Odessa is targeted at tourists. Vinnitsa, Rovno, Ternopol, Kherson and Chernigov Regions do not have any operating minibrewery , at least we are not aware of them.

Suppliers of imported equipment

The dynamics of investments to production equipment reflect to the full extent the development of small brewing in Ukraine.

Beginning with 2003 the investments of brewers to production equipment, though slowly, but steadily grew. In 2008 there was a real breakthrough after the year 2007 which was successful for Ukrainian economics. By 2009 the majority of key minibreweries manufacturers approached Ukrainian market but some of them made only several supplies. Only Zip Technologies, Techimpex and, in case of accumulation, Chinese manufacturers can be proud of two-digit numbers of sold equipment.

Let us examine in detail the changes in sales pattern within recent years.

One third of the amount of all the equipment deliveries in 2008 was made up by two Velo breweries, each supplied with a 1000 l. cooker. One more third consisted of two deliveries of Zip Technologies equipment. These were also minibreweries with the operating capacity of 1000 l. per brewage. We should charge …% to the account of Destila minibrewery delivery with the capacity of 3500 hl of beer per year. The following …% are three BlonderBeer minibreweries produced by Techimpex, with the capacity of 1000, 500 and 300 l./day. …% more were divided in equal parts between minibrewery of 250 l. per brewage produced by an Austrian company Flecks Brauhaus Technik and two breweries produced by Russian manufacturers. The rest …% is the contribution of a Chinese company.

In 2009 practically all the equipment for minibreweries was supplied by the company Zip Technologies. Relatively large sales enabled the company to occupy almost one third of Ukrainian small brewing equipment market. Zip Technologies became an absolute leader among European suppliers.

Although there were single sales of unknown to a wide audience manufacturers on the market, the main contribution was made by 5 key players. The market share of these five main manufacturers in 2002-2009, according to our estimation, was distributed in the following way: Zip Technologies – …%; Velo – …%; Destila – …%; Techimpex – …%; Salm – …%.

While prerecession years were quite profitable for European manufacturers and Chinese enterprises sales share did not even exceed …%, in 2010-2011 the situation rapidly changed. Lack of moderate loans made Ukrainian employers take risks and switch from the western direction to the eastern one. Chinese manufacturers supplies became the main ones, not only by the number of imported breweries, but also by its total cost.

Chinese breweries are more frequently purchased by Ukrainian engineering companies, which provide their configuration, assemblage and alignment for ultimate customers. But sometimes extremely inexpensive Chinese equipment is purchased by direct contracts and is assembled by the brewers themselves or by non-core companies. According to our estimation, in 2010-2011 average customs cost of a Chinese minibrewery with the capacity of 1000 l. per day comprised only $…-$… thousand. Breweries of the majority of European manufacturers cost 5-10 times more expensive.

Main manufacturers’ market shares in 2010-2011 by value were as follows: Zip Technologies – …%; Kaspar Schulz – …%; Techimpex – …%; MBA 21 Trading – …%; Hartong – …%; HBH – …%. … Chinese breweries were sold within particularly these years.

Perspectives

New restaurant and industrial minibreweries launching rate in Ukraine comprised (+ …%) in 2010 and (+ …%) in 2011. But the number of minibreweries per capita still falls twofold behind Russian rate and four fold behind American one. Therefore it is possible to conclude that Ukrainian market of small brewing undergoes the period of active growth. In years to come this market is also able to grow, as “live” beer of middle breweries does not always satisfy the increasing demand of consumers and this gap can be filled in by minibreweries which offer quality and various products.

So what opportunities are available for the development of craft brewing?

According to the data of marketing companies, the share of expensive brands and import beer comprises about …% in the total sales. This is exactly the percentage of Ukrainian beer lovers who are ready to pay for the quality and variety by now. That is why it is possible to expect a gradual increase in the number of minibreweries. It appears that one half of this number, namely …-…%, is particularly the basis to the extent of which the total share of industry and restaurant minibreweries can in the long term grow in the structure of Ukrainian beer market. Of course, providing that they will manufacture quality and tasty products and the aspiration of manufacturers and investors to save money by buying cheaper equipment can harm that.

The materials of the article are prepared basing on the import supplies statistics using information system “Mozaika” (www.infomozaika.ru). A row of assessments are based on the data concerning the realized projects directly from producers of import equipment or on information published by equipment buyers.

In separate cases the estimated cost of equipment can considerably differ from the actual one, if the supply was made by different importers or at different time. The data on the cost, structure, and volume of import supplies as well as on their interpretation should be considered not as the contract price but as our expert assessment.

We do not guarantee the cited information to be completely precise, though it is based on the data obtained from reliable sources. One should not be solely reliant on the article contents instead of conducting analysis of one’s own.

2CheckOut.com Inc. (Ohio, USA) is an authorized retailer for goods and services provided by Journal.Beer.

ABC

34, pub

Aleksandrovka (brewery in settlement)

AltBier, restaurant

Arena Beer House, restaurant

Artishok, art-club

AS-Pivo (restaurant Na Psel’skoy)

Avers-Brovar

Bavariya, restaurant

Beer Bar

Beer House, restaurant

Birhof Volyn’

Birhoff Pivovarnya, restaurant

Bochka, restaurant

Bogemskiy, restaurant

Brovar Hof, restaurant

Ch.U.M.A.K.O.V., restaurant

Cherkasskaya Bavariya

Dobriy Shubin, restaurant

Dobropol’skiy pivzavod

Donart

Druzhba

Dva kuma, restaurant

Ekspoteks

Ekstrakom

Evro-pivo

Fabrikant, restaurant

Genrikh Shults, pub

Gipfel, pub

Goyra, art-pub

Izmailskaya pivovarnya

Kosmopolit, restaurant

Kray-2

Kumpel, restaurant

Lyustdorf, restaurant

Misto Pivnushka, restaurant

Mykulichin Pivovarnya

Myunkhen, pub

Nashe pivo

Oleynik Nikolay Alekseevich, PE

Parovoy brovar Stanislavova, pub

Pervaya azovskaya pivovarnya

Pervyy Dnepropetrovskiy pivzavod

Pingvin, cafe-bar

Pinta, cafe

Pivarium, restaurant

Pivnaya duma, restaurant

Pivnaya liga

Pivnoy Sad, restaurant

Pivodar

Pivovarnya s restoranom, restaurant

Port Royal, restaurant

Porter Pub

Probka Pivovarnya

Proletarskiy, pub

Reikartz River Nikolaev, restaurant

Ritm-Yug, PE

Sevastopolskaya chastnaya pivovarnya

Shale, restaurant

Shults Privatna brovarnya (restaurant Shults)

Shults, restaurant

Slavutich-Shato, restaurant

Solomenskaya pivovarnya, restaurant

Soveren

Star, hotel-restaurant complex

Stargorod, restaurant

SVTK

Taler, restaurant

Titan

To Dublin, pub

Trial

Vatutinskaya pivovarnya

Vinmart-produkt

Vivat Provintsiya, restaurant

Yager Pivovarnya

Yuzovskaya Pivovarnya, restaurant

Zavod EKO-Produkt