Premium beer in emerging markets forecasts to edition

Transcription

1 Premium beer in emerging markets forecasts to edition

2 Premium beer in emerging markets forecasts to edition By just-drinks research team May 2012 Published by Aroq Limited Seneca House Buntsford Park Road Bromsgrove Worcestershire B60 3DX United Kingdom Tel: +44 (0) Fax: +44 (0) Web: Registered in England no: i

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4 Table of contents Categorisation notes What is premium beer? Introduction Global beer market Size of premium beer market Emerging market structure Chapter 1 Asia China India Vietnam Thailand Philippines Chapter 2 Eastern Europe Russia Poland Ukraine Chapter 3 Latin America Brazil Mexico Venezuela Argentina Colombia Chapter 4 Middle East and Africa Egypt Ghana Nigeria South Africa iv

5 Turkey Chapter 5 Conclusion Size of premium beer market by 2016 Analysis by region Future prospects for the major brands List of tables Table 1: Beer production by major market, (m kl) Table 2: Premium beer market sales by region (m kl) Table 3: Beer production in Asia by major market, (m kl) Table 4: Beer production in Eastern Europe by major market, (m kl) Table 5: Beer production in Latin America by major market, (m kl) Table 6: Beer production in Middle East and Africa by major market, (m kl) Table 7: Premium beer market sales by region (m kl) List of figures Figure 1: Market share of beer brands in China, 2011 (%), est Figure 2: Market share of premium beer brands in India, 2011 (%), est Figure 3: Market share of premium beer brands in Russia, 2011 (%), est Figure 4: Market share of leading beer companies in Ukraine, 2011 (%) est Figure 5: Market share of leading beer companies in Bulgaria, 2011 (%), est Figure 6: Market share of leading beer companies in Bulgaria, 2011 (%), est Figure 7: Market share of leading beer brands in Colombia, 2011 (%), est Figure 8: Market share of leading beer brands in Egypt, 2011 (%), est Figure 9: Market share of premium beer brands in Ghana, 2011 (%), est Figure 10: Market share of premium beer brands in South Africa, 2011 (%), est Figure 11: Market share of beer companies in Turkey, 2011 (%), est v

6 Categorisation notes What is premium beer? Premium beer is broadly understood to refer to any beer that contains high alcohol by volume (abv) content, with a marked emphasis on the quality of its ingredients and flavour. The British Beer and Pub Association defines premium beer as having abv levels of between xxx% and xxx%, with anything stronger regarded as super strength. Premium beers are consequently more expensive than their mainstream counterparts, often priced between xx% and xx% more to account for the increased cost of production and packaging and the expense of image-appropriate advertising and marketing. Despite the increased outlay demanded by premium beers, they offer manufacturers more lucrative rewards than mainstream lagers and ales. However, at present there is no legal standard in place for brewers to abide by and, as such, the word premium is often misappropriated by marketers seeking to capitalise on a prestige term in order to promote their product despite its lacking the necessary alcohol content. Alternatively the term is misused to refer to beer which has high abv content but not the expected quality. The branding of such reduced-alcohol beers as Beck s Vier and Amstel as premium 4% by Anheuser-Busch InBev (A-B InBev) and Heineken respectively is an example of the complications that can be encountered when referring to brands as premium. vii

7 Introduction Global beer market The global beer market is currently in the process of recovering from the economic downturn. With recession striking the US and the sovereign debt crisis placing the eurozone under strain, beer sales, along with those of all other non-essential consumer goods, have been impacted over the last four years. Previously reliable Western beer markets are now beset with unemployment, reduced spending and high fuel costs. These unfavourable conditions have been compounded for brewers by the emergence of an increased awareness among consumers of the detrimental effects that excessive alcohol consumption can have on their health, increasingly leading individuals to reassess and downsize their social drinking habits. This situation has led the big four brewers A-B InBev, SABMiller, Heineken and Carlsberg to reconsider their approach and revise their product lines, giving rise to an increased emphasis on the production and sale of superior premium beers distinct from their reliable mainstream brands. It has also sparked these companies into pursuing new expansion strategies and opportunities in emerging markets. All four have pushed into new territories in Asia, Eastern Europe, Latin America and Africa in recent years, making acquisitions, forging strategic partnerships and agreeing licensing deals with local distributors in a bid to expand their global outreach and reduce dependence on increasingly troubled traditional markets. The BRIC (Brazil, Russia, India, China) nations, as well as many of their smaller, newly industrialising neighbours, represent huge potential for growth. As they become increasingly urbanised they are witnessing an expanding middle classes of enlightened consumers with increased income and brand awareness, many of whom show a clear preference for superior quality products. 1

8 Chapter 1 Asia Table 3: Beer production in Asia by major market, (m kl) k Country F 2013F 2014F 2015F 2016F China India Vietnam Philippines Thailand Source: just-drinks, Kirin Institute of Food & Drink China China is now the world s largest beer market by volume and, with a population of over xxxbn, represents a major opportunity for international brewers seeking to promote premium brands so long as they are prepared to tackle tough local competition in a fragmented marketplace. Total premium beer sales in Asia stood at xxxxx m kl in 2011, with China taking the largest share of the market. Indeed, China s total beer production across all categories accounted for xxxxxm kl after five years of impressive growth. China is now expected to continue to lead the continent and spearhead the development of the premium beer sector, with total Chinese beer sales forecast to reach xxxxxm kl by 2016 as wealth surges and consumption increases. Currently, premium brands account for just x% of these sales, however, compared to the xx% estimated in traditional markets such as Germany and France by Reuters. China does have the all-important expanding middle class on its side, a sector that could account for xx% of the population and consist of xxxm people by 2020, as reported by the Shanghai Morning Post. China s middle class is comprised of affluent consumers with disposable income to hand and an increased exposure to Western influences, making it an ideal target audience for more upmarket alcoholic drinks from overseas. Indeed, China s premiumisation trend is well underway, with the French region of Bordeaux seeing a xx% y-o-y increase in wine exports to China between July 2010 and July 2011, and whisky exports from Scotland to China increasing by xx% y-o-y in FY2011 as reported by AFP. Brewers too should stand to capitalise, although the domestic beer market is increasingly competitive and risks becoming oversaturated in the medium term, especially with lower priced lagers and ales. A wave of mergers and consolidation activity appears likely over the coming decade in a country in which the big four brewers still claim less than xx% of the market, with Hong Kong-based Kingway Brewery much coveted and the latest subject of speculation. 6

9 Chapter 2 Eastern Europe Table 4: Beer production in Eastern Europe by major market,, (m kl) Country F 2013F 2014F 2015F 2016F Russia Poland Ukraine Hungary Bulgaria Source: just-drinks, Kirin Institute of Food & Drink, industry interviews Russia At a time when total European premium beer sales are growing at a rate of around x% per year and finished 2011 with xxxxxm kl sold, Russia has failed to live up to the potential promised by its xxxm population recently because of the global economic downturn. The country has seen declining levels of household consumption and rising taxes on domestic goods since 2008, halting the progress of a beer industry that entirely outperformed expectations for much of the first decade of the 21st century. Russian beer production hit a peak of xxxxxm kl in 2009 before the financial crisis took hold, but a decline has since become evident. Surprisingly, the drink was only classified as an alcoholic beverage as recently as July 2011, when President Dmitry Medvedev signed a bill into law acknowledging a change in status as part of the Kremlin s anti-alcoholism drive. Previously, any consumable with less than xx% abv was considered a foodstuff and hence was not subjected to the same regulatory stipulations and licensing hurdles as spirits, a fact that serves as testament to Russia s preference for strong drinks, particularly vodka, its iconic national beverage and a prestige export product. This development bodes well for brewers as even the most expensive premium beer brand will still prove noticeably cheaper than vodka and other spirits and, as such, beer should continue to sell in spite of the country s stuttering economy and increasing political opposition. Establishments wanting to continue selling beer following the change in classification will now need a licence to do so but this should not restrict sales unduly as major retailers such as supermarkets and liquor stores will already have them. The liking for strong alcohol has also helped the Russian premium beer segment develop and it now accounts for approximately 50% of the beer market. Growth is still expected in 2012, however, with GDP expected to rise xxx% this year and, as such, we foresee the sector returning to growth in 2012, and achieving production of xxxxxm kl in Overall the long-term growth prospects for Russia s beer sector are exciting despite recent setbacks. 13

10 Chapter 3 Latin America Table 5: Beer production in Latin America by major market, (m kl) Country Brazil Mexico Venezuela Argentina Colombia Source: just-drinks, Kirin Institute of Food & Drink Brazil South America experienced xxxxm kl of premium beer sales in 2011 and is home to the world s third-largest beer market by volume: Brazil. The reason for such low premium volume is that due to the hot weather many consumers prefer lighter beers in this region, and therefore premium has not taken off as it has in other regions. Total beer production in the country has proven to be fairly stable over the past few years but jumped from xxxxx m kl in 2009 to 1xxxxxm kl in 2010 at the height of the global economic crisis. Since then, beer production has risen to xxxxxm kl in 2011, a phenomenon attributable to returning consumer confidence and a revival in the country s tourism industry, with beer consumption closely tied to carnival season. The introduction of stringent new drink driving legislation in June 2008 appears not to have had the impact on the industry that some observers had feared. Like China and Russia, Brazil has a large population around xxxm and an aspirational middle class, which, coupled with economic expansion, could leave the country primed for a premiumisation boom. Presently, premium beers remain a very niche segment accounting for only around x% of the market although further growth is predicted as manufacturers gain confidence following the success of Stella Artois and Bavaria Premium, both of which were launched in 2005, and continue to introduce new brands. However, the converging market drivers could also conspire to spark increasing wine sales, directly challenging the emergence of a widespread premium beer drinking culture. Beer is more established in Brazil than in many of its South American neighbour states because of its long association with Germany as well as Portugal, tracing back to a wave of German mass immigration in the 1820s and explaining the country s enduring taste for traditional pilsners. From this strong base, we see Brazilian beer production reaching xxxxxxm kl in

11 Chapter 4 Middle East and Africa Table 6: Beer production in Middle East and Africa by major market, (m kl) Country F 2013F 2014F 2015F 2016F Egypt Ghana Nigeria South Africa Turkey Source: just-drinks, Kirin Institute of Food & Drink Egypt Premium beer sales in the MENA region stood at xxxxm kl in This is perhaps less surprising when you consider the drink s history and the fact the invention of beer can be traced back to Ancient Egypt. However, today xx% of the country s population follows Islam, leaving the country s beer sector particularly reliant on its US$xxbn per year tourism industry. Advertising is heavily restricted but consumption of alcohol is permitted in cafes, restaurants and other locations beyond hotel bars, which is not the case in much of the rest of the Middle East. However, international media coverage of the civil unrest seen during the Arab Spring in 2011 and the violent rioting at a football match in Port Said in early February 2012 that led to the deaths of 74 supporters is highly likely to deter holidaymakers from visiting the country s historic monuments and scenic coastline in the short term. Indeed, Egyptian tourism minister Mounir Fakhry Abdel Nour announced in January 2012 that the number of visitors to the country had declined by xx% between 2011 and 2010 as revenues slid to US$xxxbn, according to The Egypt Independent. Despite the country s ongoing political instability, beer production rose steadily from xxxxm kl in 2006 to xxxxm kl in Furthermore, tourists, by definition, are affluent and should represent an ideal target demographic for premium beer brands once Egypt s current turmoil is resolved. So long as an economic recovery occurs, and a predicted GDP rise to US$xxxxxbn (PPP) in 2012 suggests that it will, Egyptian beer production could rise as to xxxxm kl by

12 Chapter 5 Conclusion Size of premium beer market by 2016 Table 7: : Premium beer market sales by region (m kl) Total F 2013F 2014F F 2016F Europe Asia North America South America MENA Source: just-drinks, Kirin Institute of Food & Drink The global premium beer market is unquestionably set for growth over the next four years to Interest in the sector has never been higher and all of the major brewers now appear to be convinced of the merits of pursuing the strategy. We foresee the total global premium beer marketing growing steadily by 2016, with an increase anticipated in every continent as the economic recovery continues, consumption increases and the premium sector becomes more established. In Europe, the sector is predicted to grow by x% annually over the next four years and reach total sales of xxxxxm kl in Asia will also see premium and achieve sales of xxxx m kl in 2016, significant expansion from the xxxxm kl sold in 2010 sparked by China s ascent. North America is predicted to see premium sales grow to xxxxm kl in 2016, its growth particularly inspired by a revival of interest thanks to the popularity of craft beers and microbreweries. South America is almost as exciting a prospect as Asia and is set to achieve sales of xxxxm kl in 2016 on the back of beer s growing acceptance under Brazil s influence and the increasing sophistication of its industry. Perhaps most surprisingly, the MENA region is another significant growth area for premium beer sales, with sales set to hit xxxxm kl in 2016, the majority of which stems from booming northern Africa and the return of tourism to Middle Eastern resorts after the instability of the Arab Spring. The developed world is still important. The size of the US market can t be ignored. SABMiller marketing executive 37