Review of the Year 2013 - Part II: Beer & Cider
The US opportunity for cidermakers remains significant
It's that time of year when just-drinks takes a look back at the last 12 months. Here, in part two of our final management briefing of the year, our deputy editor, James Wilmore, runs his eye over beer and cider's highs and lows in 2013.
Big brewers endured another bumpy ride in 2013, but, as with many of the world's economies, light is starting to flicker at the end of the tunnel.
As predicted this time last year, major M&A news subsided. After Anheuser-Busch InBev's initial swoop for Modelo, Heineken's acqusition of Asia Pacific Breweries and Molson Coors bid for StarBev in 2012, this year was more about big producers intergrating new assets and building on established ones.
So how does the global landscape look now? A-B InBev did not actually gets its hand on Corona brewer Modelo until June this year after ironing out US competition concerns. All of which resulted in Constellation Brands leapfrogging to being the US' third biggest beer seller. As A-B InBev looks to make Corona a global brand, like Budweiser, it is now working through the distribution deals already in place for the brand.
A-B InBev's nearest global rival, SABMiller, upped its interest in China by taking full control of Kingway Brewery through its Snow JV. However, the UK-headquartered group saw a couple of high-profile legal battles dampen its spirits this year. In Mexico, the company was unhappy with a court's ruling on competition in the beer market, while in Canada it has so far narrowly avoided a courtroom showdown with its friends in the US, Molson Coors.
Heineken moved to sell off its Hartwall unit in Finland. Meanwhile its European rivals Carlsberg doubled its stake in China's Chongqing Brewery and revealed a shake-up of its ownership structure, as it eyes more acquisitions.
Beyond Asia, the most enticing opportunity for global brewers remains Africa. This year saw companies upping their capital investment in the region. SABMiller announced plans for a new US$40m brewery in Namibia, while Heineken started work on a major new facility in Ethiopia. Diageo, meanwhile, set out to relaunch Guinness across the continent.
Latin America also gave brewers plenty to smile about, with A-B InBev in Brazil and SABMiller in Colombia, for example, continuing to make hay.
On the other hand, Russia remains a fiercely difficult place for beer firms to operate. A ban on beer kiosks and new advertising laws all, predicatably, took their toll this year. In Turkey similar restrictions bruised brewers.
In the US, craft beer continued its inexporable rise, mostly to the detriment of mainstream brands . However, A-B InBev signalled it is further eyeing the craft beer territory, with brand premiumisation and more new launches planned.
One intriuging smaller deal was the sale of Kansas City craft brewer Boulevard to Belgium firm Duvel. Will this kick-off a trend of independent US brewers selling up when the price is right?
On the other side of the Atlantic, UK family brewers seemed to be doing their best to capture a bit of magic from their US craft counterparts, with a series of launches mirroring American styles. Britain's brewing industry was also boosted by the government's much-welcomed dumping of automatic duty hikes.
In Australia, meanwhile, the beer category endured a particularly tough time.
Looking ahead to 2014, we may yet see global brewers' appetite for large-scale deals resume. A-B InBev and SABMiller is still the “mega-merger” that every journalist dreams of, although a deal feels unlikely in the short-term. Carlsberg, meanwhile, is likely to look East.
On the trading front, A-B InBev's Brazil unit AmBev will be licking its lips at the prospect of the football World Cup, as it enjoys a dominant position in the country. Elsewhere, brewers seem undecided on when their Russian rumpus might end.
For cidermakers, the US remains the region to get pulses racing. Figures released just this week show that US on-trade sales are comfortably outpacing beer - with growth being driven by the channel's three main brands.
Eyeing this opportunity, the big brewers showed they wanted more of this growing (apple) pie. MillerCoors announced plans to launch a new 6% hard cider - Smith and Forge - next year. This was followed last month by A-B InBev revealing its was adding to its cider stable with a major new launch next year too. The “gender-neutral” nature of cider appears to be what is attracting new consumers to the category, commentators suggest.
Meanhile, A-B InBev also launched its Stella Artois Cidre brand in 26 US states this year, after seeing the brand peform strongly in its debut market of the UK.
Irish group C&C is also very much in the game, having completed its acquisition of the Vermont Hard Cider Company, owner of the Woodchuck brand.
Back across the pond, in the UK, where around half of the world's cider is drunk, C&C said better summer weather helped slow decling volumes, but the market remains fiercely competitive.
Heineken gave a big push to its Bulmers brand, but then ended up in hot water with the advertising authorities.
Westons meanwhile upped its focus on Australia, another emerging market for the category, and even has its eye on China.
Flavours in the category are also evolving, with some producers breaking out of the apple and pear stronghold to launch berry and tropical flavours. Scottish producer Thistley Cross has even strarted ageing some of its ciders in whisky casks. Although one expert warned of too many "faddy" flavour innovations.
With the big groups upping their interests in the category and other traditional producers boosting their facilities, 2014 is set to be another strong year of growth for cider, particularly in the US.
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