Weekly analytical column of Vadim Drobiz
Week May, 16 2016 – May, 22 2016
Vadim Drobiz – Head of the Center for Federal and Regional Alcohol Market Research (CFRAMR)
The most quoted in the Russian media expert on the alcohol market of Russia, former Soviet republics and Eastern Europe. The latest news, detailed analysis, commentary, statistical databases on the alcohol market since 2002.
Full versions of the materials published in Russian on the website Vadim Drobiz http://cifrra.info/
The situation on the Russian wine market and retail trade
I have already said earlier that since February this year, almost completed import substitution of finished wine production in Russia. Production of own wine in the first quarter (-7.9%) and imports (+ 4.1%). If we take one month of March, imports (+ 21%). In sparkling wines in the first quarter of this year, its own production (-16.7%), but already in March (-4.9%). Import sparkling in the first quarter of this year (+ 1.4%) in March (+ 34%).
It is normal that in the first quarter continued to actively import of imported wine materials (+48%) – in this is the salvation of our market from counterfeit. Planted new vineyards over the years 2013- 2015, will give significant crop only in 2020. They can give a yield increase about (+ 19%) and (+ 19%) of finished wine to the figures of 2015. Not previously and no more.
Recently, the Russian media often commented on the rise in prices of the part of wine production in the first quarter of 2016. From my point of view, this shows excessive dependence of Russian winemaking on imports wine materials and exchange currency rates. In October and November 2015 the dollar was 67-70 rubles, and at that time in the retail price many of companies was laid rate no higher than 65 rubles. The end of December last year – in January 2016 the dollar was about 80 rubles. Since February went falling dollar. It is understood that on the shelves in March wine sold at a high rate of December – January. And just as it is clear that fall in retail prices after the fall of the dollar in March and stabilize it at the level of 66-67 rubles will not be. Wine trading business is forced to lay in the retail price rate of the dollar is not less than 73 rubles to insure the next inevitable recession of ruble. No one wants to transfer the foreign exchange fluctuations in the price jumps, and immediately laid the high dollar rate in retail prices.
Table for the production of wine products in Russia
|Production figures(mln dal)||2010||2011||2012||2013||2014||2015|
Non-alcoholic beer: Trends and Prospects
Non-alcoholic beer is becoming more popular among Russians: in the first quarter of 2016 its production increased by 34.5% at once. Among the reasons – improving the taste of the drink and a lot of advertising, according to retailers and manufacturers.
In the first three months of 2016 in Russia was produced 13.3 million liters of non-alcoholic beer, which is 34.5% more than in the same period of 2015. The increase in total beer production in the whole country amounted to 6.4%, to a value of 1.56 billion liters (i.e., non-alcoholic beer had less than 1% of the total beer production in the country).
Three years ago, alcohol-free (or “zero”) beer is not caused much interest among Russian consumers, but the situation is changing: from 2013 to 2015, the non-alcoholic beer production increased by 9.4%, despite the fact that the country’s total production of beer has decreased over same period by 19%. Only 2015 non-alcoholic segment grew by 1.1%, to 72 million liters, despite the fact that beer production in the year as a whole fell by 5.7%, to 7.3 billion liters. According to the research company Nielsen, the share of non-alcoholic beer now accounts for 1.08% of all beer sales in Russia. In 2013, its share was less – 0.73%.
The growth of non-alcoholic beer production and increased assortment in this category are mainly related to the specifics of advertising legislation in Russia. Beer, containing alcohol, are allowed to advertise only during the broadcast of sport events, only at a certain time, in addition, to such advertising is prohibited to use images of people and animals. For the non-alcoholic beer all these restrictions do not apply, so manufacturers often promote it as an umbrella brand for the advertising entire line of its beer. With this advertisement the consumer learns about the existence of non-alcoholic varieties and buying them more often.
Prior to 2016 advertising of non-alcoholic beer on central TV channels appeared only sporadically, and is now present in the ads blocks on a permanent basis. Advertising of non-alcoholic beer on television – a great opportunity for the producer of beer to advertise your entire brand. For the manufacturer of non-alcoholic beer production – to a greater extent this is an opportunity to stimulate interest in the brand as a whole, including alcoholic beer.
As evidenced by the company TNS Global data (monitors more than 550 TV channels in 29 Russian cities, including Moscow), brewing company in 2016 actually returned to the number of advertisers on TV. In the first quarter beer commercials were aired on TV 766 times; their total duration was just over 217 minutes. However, while it is still quite a bit. For comparison: in the first quarter of 2012, when a ban on alcohol advertising of beer has not acted (was introduced on July 1, 2012, and before that the ads may appear on the air after 22 hours), TNS recorded 6077 shows a total duration of 2014 minutes.
Representatives of the brewers companies agree that until the beginning of 2016 wary of television advertising. Possibility of advertising non-alcoholic beer for industry have always been. The only thing that stopped from being able to start using this right in full – the lack of effective tools for the labeling of this product in such a way to avoid any mixing alcohol with non-alcoholic brands.
As a result, the market leaders have agreed to a special icon that emphasizes soft nature of the products, and received a guarantee from the Federal monopoly service supervising compliance with the law “On Advertising”, which claims to such ads will not arise. In the summer of 2014 the company “SUN InBev” (Russian division of the Belgian brewing corporation AB InBev) released promo video of beer “Siberian Crown nonalcoholic”, starring Hollywood star David Duchovny, and in 2016 – in favor of soft beer Hoegaarden ads with Chuck Norris.
The leader of the soft segment of the Russian beer market with a share of 58.8% is “Baltika” (owned by the Danish Carlsberg), promoting the brand “Baltika 0″. In 2013, the company’s share was higher – 79.9%. The development of non-alcoholic drinks portfolio for Carlsberg is one of the strategic goal on the global market.
The press service of the Moscow Brewing Company said that also rely on the non-alcoholic variety. There are non-alcoholic “Trechgornoe”, which is specially produced for sale at the stadiums during football matches. Such a non-alcoholic beer may be sold also on airplanes, trains, etc.
The representative of another brewer Efes Rus said the company believes in the potential of soft segments: Efes had and before quite an extensive range of non-alcoholic beer in the assortment of products, and in 2016 the company launched three new non-alcoholic varieties, including under the Miller brand.
The representative of Heineken (has in the portfolio non-alcoholic version Amstel and Zlatý Bažant) said that the increase in this category of his company has been going on for two years. He believes that the growth in demand for this type of beer production is not so much connected with the appearance of a large number of commercials on television, how much is a global trend, coupled with the popularity of healthy lifestyles.
According to Euromonitor International, if in 2013 the world market of non-alcoholic beer was $ 5 billion, that by 2018 will grow to $ 6.5 billion. The main driver of growth is actively work of breweries in Muslim countries where alcohol consumption is prohibited or not welcome by religious reasons. “For example, in Iran, non-alcoholic beer consumption growth is now such that if tomorrow will come the end of the world”, – quotes the expert of Euromonitor Huffington Post. Among other reasons, the expert called the work of companies to improve the taste of non-alcoholic beer – “in the 1990s, it even does not reminiscent taste of beer.”