Efes grows against market trend
It’s probably small consolation to Efes executive suite that its Ukrainian unit in 2012 managed to grow its beer sales volume by 14 percent over 2011, although beer production in this eastern European country as a whole declined 1.6 percent over 2011 to 30 million hl.
The Turkish brewer is only a distant number four player with a market share of about 6.5 percent, even after the combination with SABMiller, the Kommersant newspaper reported on 21 January 2013.
Ukraine’s beer market is still dominated by SUN InBev Ukraine (35% market share), Carlsberg Ukraine (28%) and locally-owned brewer Obolon (21%).
Already on 14 December 2012, Carlsberg Ukraine issued a warning, saying that its beer sales declined 8 percent in volume terms in the January to September 2012 period over the same period in 2011. However, revenues rose by 2.1 percent mainly due to an increase in beer prices.
June’s football gala, aka Euro 2012, gave the Ukraine’s economy – and its brewers – an unexpected boost, but could not prevent the country’s GDP merely growing by 0.5 percent for the full year. “In the third quarter of 2012, Ukraine’s economy recorded negative growth (-1.3%) for the first time since its 2009 economic crisis. Fourth quarter GDP is projected to suffer a further decline, bringing Ukraine into formal recession. In addition to the worsening macroeconomic indicators, Ukraine is also facing a series of concomitant economic problems: a growing trade deficit, industrial decline, shrinking foreign exchange reserves, and the weakening of the hryvnia”, the Warsaw-based Center for Eastern Studies (OWS) said on 21 December 2012.
On 21 January 2013, Efes Ukraine reported that the company’s sales volume grew 14 percent year-on-year. This marks a slowdown which is widely attributed to a complicated integration process. In early 2012, SABMiller sold its Ukrainian subsidiary to Anadolu Efes in exchange for a 24 percent stake in the Turkish group. That’s when Efes took over management of SABMiller’s local operations. The transaction took place only at the end of last year, when the company officially changed its name from Miller Brands Ukraine to Efes Ukraine.
Kommersant blames the slowdown in growth on an under-investment in marketing. Bogged down by integration procedures, Efes did not launch any new brands, the CEO of Carlsberg Ukraine, Pyotr Chernyshev, was quoted as saying. Besides Efes Ukraine did not commit itself to any full-scale (read expensive) advertising campaigns for its premium brands, although advertising is essential in this segment. In the Ukrainian premium beer segment, according to a spokesperson for brewer Persha Pryvatna Brovarnya (PPB), there were only two brands which showed any significant growth in 2012: Bud from SUN InBev Ukraine and the Stare Misto brand produced by PPB.
Competitors claim that in fact Efes’ volume hike was only due to Efes pushing its cheap, old and low-margin brands.
Having completed a capacity expansion, Efes has promised to launch several new products this year. Although Efes has refrained from saying which, competitors expect it to bring in brands from its now expanded brand portfolio. Carlsberg’s Mr Chernyshov believes the Turkish company will launch Bely Medved, Stary Melnik and Efes beer, which are already selling well in Russia. So far, these brands are imported into the Ukraine by independent importers, Kommerstant wrote.
The Ukraine is the sixth largest beer market in Europe, after Russia, Germany, the UK, Poland and Spain. Per capita consumption of beer in Ukraine is around 60 litres. Consumers prefer classical lagers, says Efes, which means that other subcategories (stouts, ales, dark beer, etc.) are underdeveloped.
