Overall beer consumption saw a decline, with consumers' purchasing power seriously eroded compared to last year. These difficulties were further compounded by an increase of exercise tax on beer, further legislative restrictions and a partial shift of low incomes consumers from the economy beer segment to illegal vodka or home-made spirits. Despite the worries of the beer industry as a whole, small-sized regional breweries and premium priced beer were able to increase their sales volumes. Beer consumption was also helped by the partially lifted restriction of beer advertising at sporting events.
- Markets continue to decline
- However, premium segment saw growth
- Craft beer continues to take share from major brewers
- Economic conditions effect consumer purchasing power
- Restrictions for advertising have been lifted for sports events
Canadean's Russia Beer Market Insights 2015 Report provides a complete overview of the Russia beer industry structure offering a comprehensive insight into historical background trends, 2014 performance and 2015 outlook. Covering total market (on and off-premise) the report details:
- 2010-2014 actual detailed beer consumption volume data by segment, brand, brewer, packaging and distribution (on-/off-premise), with 2015 forecasts
- Top line production, import, export and consumption volume from 2004-2014 with forecasts for 2015
- Value by distribution channel 2010-2014, with 2015 forecasts
- 2013-2015 selected on-/ off-premise retail prices
- Details of key beer new product launches in 2014 by company
- Overview of the competitive landscape in the beer market, with analysis of key company performance
- Insightful and valuable analysis of the drivers behind both current and emerging trends in the beer market
- Data is also available in excel format
- Gain an in-depth understanding of the dynamics and structure of the Russia beer industry, from the latest competitive intelligence of both historical and forecast trends to enhance your corporate strategic planning
- Evaluate the current emerging trends and future growth opportunities in the Russia beer market to support your brand development and marketing initiatives
- Understand volume vs value trends and identify the key growth opportunities across the super-premium, premium, mainstream and discount segments to best target profitability
- Analyse domestic and imported beer brand performance and determine the key trends driving consumption preference to develop a competitive advantage
- Interrogate the unique granularity of our data to analyse the market on a variety of levels to make well-informed decisions on future threats and growth prospects in the marketplace for your company
- Use our new powerpoint add-on to quickly absorb a succinct summary of the key trends in the Russia beer market
- View a selection of the key 2014 product launches and identify competitor activity and product innovation and differentiation prospects
2 EXECUTIVE SUMMARY
3 MARKET CONTEXT
3.1 Market Context
3.2 Market Parameters Tables
3.3 Legislation and Taxation Tables
4 MARKET BACKGROUND BRIEFING
5 MARKET UPDATE
5.1 Market Commentary
5.2 New Products and Photo Shots
5.3 Packaging Trends
5.4 Beer Pricing Tables
5.5 Beer Data Tables
6 BREWER PROFILES
7.2 Methodology and Product Definitions
LIST OF FIGURES
Figure 1: Beer Leading Brewers/Importers, 2014
Figure 2: Beer Consumption by Pack Material/Type, 2014
Figure 3: Beer Distribution by Channel, 2014
Figure 4: Beer Consumption by Price Segment, 2014
BBH Russia, Sun InBev, Efes Russia, Oasis Beverages
A hostile regulatory environment - which has imposed significant restrictions on the advertisement of beer - and further increases in the excise tax burden suggest a bleak future for the Beer market in Russia, according to leading consumer specialist Canadean’s new report: Russia Beer Market Insights 2013. This is despite innovative efforts - especially from microbreweries - to attract new clients through the creation of new types outlets for on premise beer consumption, and is compounded by the expected implementation of a new law to prohibit the packaging of beer in plastic bottles larger than 50cl from January 2014 that will drive low-income consumers to lower priced spirits.
For organizations that have a stake in the Russian beer market, a proper understanding of the broader context of life in Russia, and beer’s place in it, is paramount to successfully capitalizing on the opportunities the market presents.
Whilst Quick Service Restaurants such as McDonald’s have been growing in popularity, and ‘traditional eating’ outlets still have significant presence in medium and small-sized towns and villages, eating out every day is still too expensive for the majority of Russian consumers.
Food and drink prices in on-premise channels are fairly high (from two to three times higher than in retail), though are usually less expensive in small-sized towns; even in these more moderately priced outlets, only comfortably middle class consumers can afford to frequent them on an everyday basis.
In the Soviet period, alcohol consumption was mainly focused on spirits – predominantly Vodka. However, the past twenty years have seen a shift in consumption patterns, with the younger generations and most advanced middle class consumers gradually switching their preferences from vodka or other homemade spirits to low alcohol beverages, such as beer, wine, and flavored alcoholic beverages.
In terms of the most popular beer types, Russian consumers traditionally give preference to lager, but recently there has been a rise in the popularity of light lagers or ‘coolers’ – flavored beer and beer cocktails, with lemon and orange flavors being favored most. These drinks were targeted primarily at female consumers, with male consumers still favoring the taste of traditional beer.
Non-pasteurized & Unfiltered Beer on the Rise
Another trend in the Russian Beer market is the rise in popularity of non-pasteurized and unfiltered beers. Previously, these products were offered by large and medium sized breweries in insufficient quantities to satisfy demand. This gap in the market, coupled with the higher retail prices of bottle beer in recent years, has created favorable conditions for microbreweries to compete effectively with larger breweries in this segment, despite small volumes of production.
With the challenging cultural and economic environment for Beer in Russia, brewers must be highly sensitive to current and emerging trends in the market in order to capitalize on revenue boosting opportunities.
Production Down Due to Restocking
In 2012, production of beer in Russia declined by 4% following marginal growth the previous year. This was a consequence of significant pre-stocking at the end of 2011 by leading retail networks and wholesalers ahead of the 20% increase of excise tax on beer that was implemented from January 2012, thereby leading to diminished purchasing orders for breweries.
Consumption of Beer
Consumption of beer in volume terms for 2012 was almost the same as in 2011, with a marginal decline driven by the migration of a significant proportion of low income consumers from beer to low priced spirits, which became more price-competitive after several consecutive increases of excise tax rates for beer.
Consumption of beer brands was also negatively affected, by legislative restrictions on beer advertising that forbade all advertisement in communication media, barring BTL advertising in retail outlets. Adding further fuel to the fire of declining brand beer consumption was the restrictions placed on beer retailing through small-sized retail outlets (ie: with areas less than 50 sqm), such as kiosks.
Seeking to take advantage of the overall price increase of branded beers, along with the new limitations on advertising and retail distribution, microbreweries sought to expand their customer base by attracting new
clients to newly opened economy format outlets for the on-premises consumption of beer, which were exempt from the newly imposed restrictions on the small-sized retail outlets, thereby increasing sales volume and share.
Favorable summer weather
The summer weather was good in most of the regional markets, and positively impacted beer consumption. In fact, in Q2-12, when the weather was warm and sunny, the beer industry demonstrated positive sales dynamics compared to the same period the previous year, with the sales volumes turning negative only in the second half of the year.
Premium Prices Perform
Dynamics of consumption varied significantly depending on price segment. The more positive sales dynamics were registered in the premium price segment, with the highest growth rates demonstrated by the leading national and foreign beer brands – produced locally under licesne – as well as by imported superpremium beer brands, which were driven by rapidly growing consumer demand among wealthier consumer groups.
In the economy (discount) segment, consumption dynamics were also positive, though characterized by a low single-digit growth rate. This growth was driven by consumers downgrading from mainstream beer brands to economy beer, motivated by the increased retail prices of mainstream beer in 2012 – at an average of 10%.
The material was prepared in August, 2013.
Table 1: Russia Population Size and Growth, 1986-2017F
Table 2: East Europe Population Size and Growth, 2004-2015F
Table 3: Russia Economic Indicators, 2006-2016F
Table 4: East Europe Commercial Beverage Consumption - Per Capita, 2004-2015F
Table 5: East Europe Commercial Beverage Consumption - Per Capita % Share, 2004-2015F
Table 6: East Europe Commercial Beverage Consumption - Per Capita Growth, 2005-2015F
Table 7: Taxation Base
Table 8: Historical Excise Rates of Beer
Table 9: Legal Controls on Beer
Table 10: Tax Burden on Beer @ 5% Abv, 2014
Table 11: Leading Retail Groups for Beer 2009-2014 (number of outlets)
Table 12: Beer Key Facts
Table 13: Top 10 Beer Brands - Volume, 2012-2014
Table 14: Top 10 International Premium and Superpremium Beer Brands - Volume, 2012-2014
Table 15: Licensed Brand Owners and Licensees
Table 16: Beer Market Valuation (Local Currency), 2013-2015F
Table 17: Trade Margin Build-Up Model
Table 18: Selected Consumer Beer Prices: On-Premise, 2013-2015
Table 19: Selected Consumer Beer Prices: Off-Premise, 2013-2015
Table 20: Beer Production/Trade/Consumption 000 HL, 2004-2015F
Table 21: Beer Production/Trade/Consumption - Growth, 2004-2015F
Table 22: Consumption of FABs and Cider (000 HL), 2004-2015F
Table 23: Beer Foreign Trade By Country (Imports), 2011-2015F
Table 24: Beer Foreign Trade By Country (Exports), 2011-2015F
Table 25: Beer Market Valuation (Local Currency), 2013-2015F
Table 26: Beer Consumption by Local Definition, 2011-2015F
Table 27: Beer Consumption by Standard Price Segmentation, 2011-2015F
Table 28: Beer Consumption by Alcoholic Strength, 2011-2015F
Table 29: Beer Consumption by Type, 2011-2015F
Table 30: Beer Consumption by Geographic Scope, 2011-2015F
Table 31: Beer All Trademarks, 2010-2014
Table 32: Beer Brands by Local Definition, 2010-2014
Table 33: Beer Brands by Standard Price Segment, 2010-2014
Table 34: Beer Brands by Alcoholic Strength, 2010-2014
Table 35: Beer Brands by Type, 2010-2014
Table 36: Imported Brands by Origin, 2010-2014
Table 37: Beer Licensed Brands, 2010-2014
Table 38: Beer Private Label Brands, 2010-2014
Table 39: Beer Trademark Owners, 2010-2014
Table 40: Beer Local Operators, 2010-2014
Table 41: Beer leading Brewers/Importers, 2010-2014
Table 42: Beer Consumption by Pack Mix: Refillability/Pack/Size, 2011-2015F
Table 43: Beer Distribution: On vs Off Premise, 2011-2015F
Table 44: BBH Russia Brand Volumes 2010-2014
Table 45: Efes Russia Brand Volumes 2010-2014
Table 46: Heineken Brewery (Russia) Brand Volumes 2010-2014
Table 47: Ochakovo Brand Volumes 2010-2014
Table 48: Sun InBev Russia Brand Volumes 2010-2014