Bernstein has published the fourth edition of its annual global beer guide

Bernstein has published the fourth edition of its annual global beer guide

Earlier this week, Bernstein released the fourth edition of its annual global beer guide. With commentary from the sell-side research and brokerage firm, here's a look at the report's significant research conclusions.

Volumes

In 2014, the global beer market totalled 1.94bn hectolitres, a 0.2% increase on 2013.

Sales

Total net sales in 2014 came in at US$176.3bn, the equivalent of $91 per hectolitre of beer. However, on a regional basis, there are large disparities in the per-hectolitre figures: At the top end is North America, with around $132, with Asia Pacific running as low as $66. Even within Asia Pacific, we see disparities, such as that between China ($43 per hectolitre) and Japan ($184 per hectolitre).

Regions

North America - 17% of global beer consumption, 25% of global beer net sales
"Beer volumes have grown slightly over the last decade, driven by mildly positive demographic trends, mainly population growth. With a strong beer culture and favourable market structure, North America benefits from relatively high unit pricing and high margins."

Central & South America - 13% of total consumption, 14% of total net sales
"Beer volumes have grown rapidly over the last decade, driven by strong economic development and positive demography. Many markets across the region are organised as virtual monopolies or duopolies with strong dominant players such as Ambev and SABMiller. As a result, margins are very high across the region."

Western Europe - 14% of total consumption, 18% of total net sales
"Beer volumes have declined over the last decade as a result of negative demographic trends and lower per-capita consumption. Markets are more often than not fragmented and competitive, leading to overall lower margins by global standards, despite relatively high selling prices. However, many of the region's brewers are undertaking significant cost-cutting programmes."

Central & Eastern Europe - 12% of total consumption, 9% of total net sales
"Beer volumes have grown rapidly over the last decade, fuelled by strong economic development. However, this was very much a tale of two halves, with most of the volume growth coming in the early-2000s, up to 2007. As is the case in Western Europe, most local markets are strongly competitive (albeit retailer power is not quite as strong), leading to low pricing power and low margins by global standards. On top, specific market issues related to excise duties, regulations, and raw materials in Russia have hindered profit pool development."

Asia Pacific - 37% of total consumption, 27% of total net sales
"As in other emerging markets, beer volumes have grown rapidly due to a combination of favourable demography and strong economic development. China is by far the largest market, but it is also very fragmented and extremely competitive, leading to low selling prices/hectolitre and low margins, which drag down the overall region."

Africa - 7% of total consumption, 7% of total net sales
"Volumes have grown rapidly over the last decade (off a very low per-capita base), due to favourable demography and continuing economic development. In contrast to many large Asian beer markets, most African markets are structured as oligopolies, leading to high margins by global standards."

Brewers

Anheuser-Busch InBev - 19% global beer volume share, 22% share of global beer sales
"AB InBev's businesses are skewed to North America and Central & South America, through its 62% stake in Ambev. The group has best-in-class margins, benefiting from scale, extremely tight cost management, and favourable market structures in the Americas."

SABMiller - 12% global volume share, 12% share of sales
"SAB is the global brewer with the highest exposure to fast-growing emerging markets (over 60%), with strong positions in Africa and Central & South America leading to robust pricing power and superior margins. In contrast, SABMiller's emerging Asian operations are mainly in China and India, where operating margins are low."

Heineken - 9% global volume share, 11% share of sales
"Heineken now has a more balanced geographic mix of mature/emerging markets following the acquisitions of FEMSA in 2010 and Asia Pacific Breweries in 2012. However, the group is still heavily dependent upon low-growth, lower-margin Western Europe, although Heineken's pure beer margins in Western Europe are not as low as they seem on a reported basis, when we adjust for its very large wholesale and pub operations. In addition, the group has leading positions in many African markets, where it benefits from strong pricing power and superior margins."

Carlsberg - 6% global volume share, 5% share of sales
"Carlsberg primarily operates in Europe, which accounted for around 82% of its 2014 beer profits. In Eastern Europe, Carlsberg is largely concentrated in Russia, where Baltika has close to 40% market share, and relatively high margins. In contrast, Carlsberg has relatively low margins in Western Europe, where markets are a lot more competitive."

Kirin - 2% global volume share, 4% share of sales
"Kirin is the number two in the Japanese beer market and also has sizeable operations in Australia and Brazil."

Molson Coors - 3% global volume share, 4% share of sales
"With operations in North America and Eastern Europe, Molson Coors stands to benefit from the proposed Megabrew transaction. The company agreed late last year to purchase SABMiller's 58% stake in the two companies' MillerCoors joint venture in the US. On a pro forma basis, we estimate that Molson Coors would overtake Kirin and Carlsberg to become the number four global brewer with a 5% share of global volume, 7% of global net revenue, and 5% of global EBIT."

Constellation Brands - 1% global volume share, 2% share of sales
"Constellation has been growing rapidly since it acquired the rights to the Modelo portfolio in the US. Due to its high unit revenue and profitability from sales focused in the US, the company had an estimated 2% share of global beer net revenue and 3% of global beer EBIT in 2014."

Asahi - 2% global volume share, 3% share of sales
"Asahi is the biggest brewer in the Japanese market, with nearly 40% volume share. The group also owns a 20% stake in Tsingtao."