Beer consolidation

The redistribution of the domestic beer market is practically completed by the consolidation of the Russian beer market, it seems, is nearing completion. Yesterday, the Baltika company announced the upcoming association with the companies Pikru, Vienna and Yarpivo. It is assumed that in case of successful completion of the process, the brands already available to the company (Baltika and Arsenalnaya) will also be added “Nevskoye”, “Yarpivo” and Tuborg. The issue of a possible merger of four companies has been discussed since the middle of last year, but only now the company managers were able to formulate the conditions of the association.

“In the near future, all the necessary materials about the planned association and voting ballots will be sent to all shareholders,” explains Anton Artemyev, president of Baltika. “Filled and signed ballots should be delivered to the company until March 7 this year.” In the case of a positive decision, the United Company will become the owner of 10 breweries located in almost all federal districts of the country.

Some confusion of the unification process is largely due to the fact that the main owner of all companies is the Baltic Beveges Holding (the joint concern of the British company Scottish & Newcastle and the Danish company Carlsberg), which cannot take part in the vote, since he himself is the initiator of the process. Meanwhile, the leaders of the Baltika company are actually confident in the outcome of the vote of the minorities. “Thanks to the unification of Baltika, it will become an even stronger company, which is especially important in conditions of competition in the rapidly consolidating Russian market,” said Anton Artemyev.

Indeed, today the domestic beer market was divided between five large Western corporations that control more than 80% of the entire industry. Among them: Baltic Beveges Holding (owner of the Baltika, Pikri, Vienna and Yarkiva control bags), Sun Interbrew (Russian part of INBEV), Heineken, Sabmiller and Efes.

“The process of consolidation in the Russian market began several years ago,” says Alexey Shavezov, the media manager of the Sun Interbrew. “The plans of the unification announced by the Baltic will undoubtedly have an impact on further market consolidation and the enlargement of the players on it.”

The peak of purchasing activity in the industry came in 2004-2005. So, last year, Sun Interbrew acquired Tinkoff, and Heineken included Stepan Razin, Patra and Pete. In fact, today only two “unusual” companies remain on the market: “Ochakovo” and “Red East”. However, according to the analysts of the beer market, it is possible that this year they will doomed to become part of one largest player in the market. “The concentration of assets is an objective process,” said Vladimir Kuznetsov, PR -manager of the Union of Russian Manufacturers of Pivolcoal Products. “And now we can say that the redistribution of the market is mainly completed.”

To date, only small regional brewery remains in Russia, producing about 10 million decalits per year. According to analysts, it is to them that the main attention of large players will be focused.

Most analysts associate such a rapid enlargement of the industry with the planning stagnation in the market. According to forecasts, this year the market will grow by only 3-5 percent. For comparison: Four years ago, annual growth was 15-20 percent.

01/18/2006 / Kira Remneva, the material was published in the "newspaper" No. 6 dated 01/19/2006.