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248 posts categorized "Alcoholic Drinks"

September 15, 2014

Heineken NV rebuffs the SABMiller Plc bid

Amin AlkhatibAnalyst Insight by Amin Alkhatib - Alcoholic Drinks Analyst

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SABMiller Plc’s move to buy the majority family-owned Heineken NV was a surprise to the global beer industry, but it being rebuffed was not. This seems to be a defensive move by SABMiller and a reactionary one to speculation of an Anheuser-Busch NV take-over at a time when the latter is accumulating capital in preparation for the biggest ever buy-out in the beer market. Heineken’s decision to rebuff the offer is of no surprise due to the majority ownership by the de Carvalho-Heineken family.

According to Euromonitor, the consequences of this buyout would significantly reshape the competitive landscape for the global beer market as the second and third largest brewers would bring together over 37 billion liters of beer sales at around a 19% share of global market volume sales in 2014. The combined companies would reassert their dominance on the beer market in Western and Eastern Europe, and Middle East and Africa (MEA) placing them on the heels of Anheuser-Busch InBev NV in second place on a global level with less than 1% volume share separating the top two brewers. A-B InBev’s chances to buy out SABMiller, as speculated by the industry, would weaken as the capital required for the buy-out significantly expands. Furthermore, A-B InBev would have to deal with a major competitor in future consolidation moves, beyond those that would already exist.

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September 11, 2014

Russian Roulette, Legislative Bullets and the US$2 billion Hangover

Spiros_MalandrakisAnalyst Insight by Spiros Malandrakis - Senior Alcoholic Drinks Analyst

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All is not quiet on the Eastern Front. The Russian alcoholic drinks market- once upon a time lauded as a lynchpin of a BRIC narrative now in tatters- is already reeling under the pressure of excise tax hikes, maturity induced headwinds, advertising bans and relentlessly tightening legislation. Somewhat perversely, these are the good news- largely priced in, discussed and doused in litres of high proof optimism by key international industry players operating in Russia.

The bad news is that there is a very real danger that the country’s Mexican stand-off with the west alongside the rising spectre of Cold War sanctions, embargos and paranoia could derail international trade and agreements, undermine evolving drinking patterns and ultimately provide a fatal blow to imported beer, wine and spirits brands . With the total value of alcoholic drinks imported to Russia from countries adopting opposing squares in the global geopolitical chessboard reaching $US 2 billion in 2012, the unfolding crisis has the potential to produce the mother of all hangovers for alcoholic drinks companies putting down most of the proverbial chips on that market.

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September 8, 2014

William Grant Acquires Drambuie

Jeremy_Cunnington0Analyst Insight by Jeremy Cunnington - Senior Alcoholic Drinks Analyst

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William Grant’s acquisition of Drambuie- the Scotch based liqueur- for an undisclosed price, is strategically sound, giving the company entry into the burgeoning flavoured whisky/whisky flavoured liqueurs arena through a brand of uniquely strong heritage in the category. It also fits in with the company’s increased focus on the resurgent segment underscored with the recent appointment of a Head of Whisky Innovation.

With only 0.7% of global sales in other liqueurs in 2013, Drambuie is a small brand, but has huge potential due to the rise in popularity of flavoured whiskies and whisky based liqueurs, led by the bourbon category. The brand’s small size and the fact that it is essentially an one brand company with small resources limits that potential even in its biggest markets the US, Canada and the UK.

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September 5, 2014

Low-alcohol Beers: Reactionary or a Solution to Volume Decline in Standard Lager?

Amin AlkhatibAnalyst Insight by Amin Alkhatib - Alcoholic Drinks Analyst

Are consumers looking for less alcohol in their beers or is it just the influence of marketing by the big brewers? If we were to observe the current situation in the UK and the US there are different dynamics that suggest an answer to this question. In the former market legislative action influenced the development of a lower-ABV flavoured/mixed lagers market, while, in the latter, the performance of low-ABV beers reflects consumers’ indifference to such products.

In the UK, in October 2011, a reduced rate of general beer duty for lower-strength beer was applied to beers between 1.2% and 2.8% ABV, for both domestic and imported products. This new rate lowered the tax burden on at least 1% of the UK beer market volume sales in 2012 and 2013. However, the performance of low-ABV beers in the UK following this tax change seems somewhat reactionary.

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September 4, 2014

August 2014 Overview of New Product Launches in Alcoholic Drinks

Spiros_MalandrakisAnalyst Insight by Spiros Malandrakis - Senior Alcoholic Drinks Analyst

View Spiros Malandrakis' profile on LinkedIn

This monthly summary highlights the most interesting product launches in August, with a focus on the direction the alcoholic drinks industry is taking in terms of innovative developments.

Powders, Pills and Ice Cubes: Thinking Outside the Proverbial Bottle

Technical and technological leaps have been historically consigned to the backstage of the alcoholic drinks innovation arena- namely production, maturation and ingredients developments referring to stills, barrels and formulas that would make little sense to the uninitiated.

It was, in essence, an academic matter, practically impervious to the masses in terms of its process and in many cases merely abstractly understood in terms of its result. Anecdotal information has highlighted consumers’ relative apprehension when asked to define terms such as ‘spin cone technology’ or ‘cold filtering’. It was an uphill battle for marketers who had to translate such concepts and procedures into unique selling points reflecting genuine consumer concerns, needs and aspirations.

And yet, the drinking ritual itself, the bottles, the mixers, the ice cubes would remain almost religiously untouched as if to placate some omnipresent but vengeful bar-dwelling deity. Change was long overdue.

 

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August 19, 2014

Wine Demand Shifts from Mature to Developing Regions

Karine.DussimonAnalyst Insight by Karine Dussimon - Senior Packaging Analyst

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The future of packaging for still light grape wine is rather positive. By 2018, global retail demand is set to rise by a 2% CAGR to reach 20.3 billion units. Yet it is also going through rather revealing changes. While the ‘Old World’ continues to dominate still wine consumption in glass bottles in 2013, Western Europe is predicted to see a decline and glass is finding a new lease of life among developing regions. Asia Pacific holds some of the best opportunities for packaging and closure unit volume increase in still red wine but also white and rosé. 

A Seemingly Homogenous Market

Demand for still light grape wine packaging is on the rise, globally. Still wine packaging also remains rather concentrated in format, with the ubiquitous 750ml glass bottle and cork representing the bulk of volumes. Glass holds a share of 85% of the entire category; a characteristic which comes to a great extent from the traditions of wine production and consumption in the Old World. Western Europe still accounts for 49% of global wine packaging sales in 2013. This homogeneity in the market for still wine packaging and closures is not expected to change in any drastic manner through to 2018; yet there are some areas of diversification in evidence.

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August 17, 2014

Economy Focus Required to Meet Burgeoning Demand for Blended Scotch

Jeremy_Cunnington0Analyst Insight by Jeremy Cunnington - Senior Alcoholic Drinks Analyst

Euromonitor International’s latest forecast growth figures for other blended Scotch make happy reading for international spirits companies, with the category anticipated a volume CAGR of 3% (125 million litres) over the 2013-2018 period.

In five key markets that are expected to drive blended Scotch growth between 2013-2018 the key or at least an important growth driver in 2013 were economy brands. These five markets, laid out in the chart below are expected to account for around 60% of the category’s growth over the forecast period.

Top Five Forecast (2013-18) Growth Markets for Blended Scotch Performances in 2012/2013

BlendedScotchGrowthin2013inKeyMarkets

Source: Euromonitor International

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August 6, 2014

Price Elasticities in Alcoholic Drinks

Lan-HaAnalyst Insight by Lan Ha - Contributing Analyst

Findings from the Euromonitor International industry demand model show that price elasticity – the responsiveness of volume consumption to a change in product price – varies significantly across different alcoholic drinks categories. Interestingly, price elasticity for the majority of alcoholic drinks categories is generally higher in the developed markets as opposed to emerging and developing markets.

Figure 1: Global Demand Price Elasticity for Selected Alcoholic Drinks

Source: Euromonitor International’s Industry Demand Model (based on alcoholic drinks industry research).

Note:  Retail sales only (excludes on-trade), fixed exch. rates. The price elasticity in this article refers to a long-run elasticity, meaning a five-year cumulative effect on consumption of 1.0% price change in a given year.

Price Elasticity as an Analytical Measure

Price elasticity allows estimation of the effect a particular price change has on the volume sales of that category. The sign of price elasticity is typically negative, as price and volume demand are expected to be inversely related for the majority of products - if price rises, people tend to consume less of that product. Generally, the demand for a product is said to be (relatively) inelastic when price elasticity is (in absolute terms) less than -1.0, meaning, changes in price have a relatively small effect on the quantity of the product demanded, and it is elastic when price elasticity is (in absolute terms) more than -1.0.

This article focuses on category level price elasticity rather than brand level elasticity. Price elasticity at a category level shows how strongly consumers react to a price change, and whether they are likely to switch to another category as a result of a price change. For example, if the price of beer goes up, consumers may choose to drink less beer and more wine. The strength of the price elasticity shows whether this switch is likely to happen if price level rises across the board in the category. This is different from brand level price elasticity, which measures inner-category competition between brands, and the effect of price change a particular brand on its sales.

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July 29, 2014

Rum's Image Problem in Chile Leads to Dramatic Decrease in Sales

 

Rum, which has enjoyed a decade of uninterrupted growth in Chile, is no longer a favorite among Chilean consumers. Sales of the drink fell by about 40 percent in volume terms from 2011 to 2013. This dramatic drop was caused by rum's image problem in the country. Essentially, the drink became so popular that consumers are now tired of it. Major manufacturers are fleeing Chile, leaving the rum market to a few local brands and imports.

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Problema de imagen del ron en Chile causa dramática caída en ventas

El ron, que ha gozado de una década de crecimiento interrumpido en Chile, dejó de ser un favorito entre los consumidores. El volumen de ventas de esta bebida cayó aproximadamente 40 por ciento entre 2011 y 2013. Esta dramática caída fue causada por el problema de imagen que enfrenta el ron en el país. Fundamentalmente, el trago se volvió tan popular que los consumidores se cansaron de él. Los principales productores están yéndose de Chile, dejando el mercado en manos de algunas marcas locales e importadas.

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Recent Posts

Heineken NV rebuffs the SABMiller Plc bid

Russian Roulette, Legislative Bullets and the US$2 billion Hangover

William Grant Acquires Drambuie

Low-alcohol Beers: Reactionary or a Solution to Volume Decline in Standard Lager?

August 2014 Overview of New Product Launches in Alcoholic Drinks

Wine Demand Shifts from Mature to Developing Regions

Economy Focus Required to Meet Burgeoning Demand for Blended Scotch

Price Elasticities in Alcoholic Drinks

Rum's Image Problem in Chile Leads to Dramatic Decrease in Sales

Problema de imagen del ron en Chile causa dramática caída en ventas