GLOBAL: 2006 - quieter for brewers? Report
Last year's aggressive consolidation within the global beer industry should be more relaxed during 2006, according to a new report.
Going forward, the emphasis among brewers will be more to push brand identity, industry analysts Canadean has said in a report issued this week.
In the report, entitled 'The Company Watch Service - Beer Companies Strategic Overview 2006,' Canadean noted that Anheuser-Busch boasts the world's two largest beer brands by volume, but the strength of Bud Light and Budweiser lies mainly in the US. Only Heineken can be regarded as a truly 'global' brand, with international performance sitting firmly at the centre of the Dutch brewer's business.
Strong branding and a unique on-trade pump have helped Scottish & Newcastle lead the way in the 'Super-Chilled' segment. Within 18 months of its launch, some 50,000 'condensation' pumps were installed in the UK alone delivering Foster's, Kronenbourg Blanc, John Smith's Extra Cold and Strongbow. InBev's 'Big Chill' campaign is among the competing offerings.
The mature beer markets of Western Europe and North America continue to decline. As a result, the major brewers have focused on high growth emerging markets and in doing so, appear to be following their own individual agendas.
China offers huge potential but is home to only one national brand in Tsingtao, the report noted. The country has subsequently become a hotbed of M&A activity. India's branded beer market, meanwhile, is also largely underdeveloped with annual sales per capita of just 0.7 litres. Despite this, the popularity of inexpensive Indian Country Liquor presents a significant obstacle to future growth, Canadean said.
SABMiller and Scottish & Newcastle have both been active in the sub-continent. SABMiller took control of Shaw Wallace Breweries and upgraded Charminar Brewery to increase output to 950,000 hectolitres. The company also earmarked US$125m for future developments. Meanwhile, Scottish & Newcastle took a stake in United Breweries and Carlsberg received clearance to invest US$1m in a new import and wholesaling subsidiary.
In Eastern Europe, Russia's beer market leads the way but is less dynamic than China or India. Here, Heineken, InBev and BBH are taking advantage of being early entrants into the market. Heineken purchased five breweries during 2005 and became the country's third largest player. In contrast, SABMiller missed out on Tinkoff Brewery and Krasny Vostok. Like several of its competitors, the brewer is struggling to gain a foothold in Russian soil.
Looking forward, the major brewers face a number of challenges, the analyst said. The decline of the beer markets in Western Europe and North America requires careful management at a time when robust strategies are needed for emerging markets and competition from wines and spirits is intensifying. Tough, but exciting, times clearly lie ahead, the report concluded.
Sectors: Beer & cider
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