| The beer boom won't end until 2005 Many experts consider the Russian beer market to be one of the fastest growing markets in the world. Moreover, its growth rate is rapidly increasing: if last year it was 20%, then according to the results of the first three months of 2002, an increase of 25% has already been registered. And this is not the limit: a number of analysts believe that at least 2.5-3 years must pass for growth to slow down.
At the same time, market development is determined by three leading factors. First, although the industry is booming, it is still far from fully saturating potential consumer appetites. In Russia in 2001, the average consumption was 42-44 liters of beer per capita, in Central and Eastern Europe - 68 liters, in Western Europe - 75 liters. If we remember that the “German soul” drinks 170 liters a year, it becomes clear that the market really has room to grow.
The second determining factor: transnational concerns with Western capital reign supreme on the market, but not a single Russian (in its pure form) brewing holding is yet “fermenting and foaming.” At the same time, small regional producers are leaving the scene, and the share of “Westerners” is growing. And as a consequence of this, there is a third factor: the Russian beer industry is one of the few in our country that can boast that the quality of the product it produces fully complies with world standards. Beer versus vodka
Analysts differ in their estimates regarding the capacity of the Russian beer market: they fluctuate between 100 and 150 billion rubles. “According to our estimates, the average market turnover is about 100 billion rubles,” says Pavel Biryukov, acting. Head of the Marketing Department of OJSC Baltika Brewing Company. And in the St. Petersburg investment company AVK It is believed that last year $4 billion 748.5 million worth of beer was brewed and sold in the country. According to the same source, this year the production volume of the drink will be 5 billion 67 million dollars, in 2003 - 5 billion 148 million dollars. And by 2005, the market, AVK analysts predict, will grow to $5.3 billion. If in 1999 the total volume of beer production in Russia was 450 million decaliters, then in 2001 it was already 631 million decaliters. By 2005, the market will almost double compared to 1999 and grow to 845 decalitres.
However, some analysts are concerned that growth may slow down not from 2005, but from 2003. In particular, marketers at the Vienna brewing company claim that from the beginning of next year, excise taxes on beer will be increased by 25%, which will of course affect both the price of the drink and the volume of production. Thus, analysts believe that if since 1996, when the “beer boom” began, brewers have been resting on the laurels of a crushing victory over competing producers of strong drinks, then in the near future “vodka producers” may regain some of the lost positions.
“Since consumers in Russia are quite price sensitive, due to the increase in the cost of beer, people may reorient themselves again to strong alcoholic drinks, which will have a very negative impact on public health,” the Vena company said.
Brewers fear that unjustified legislative “slingshots” may reduce growth rates. The President of OJSC Baltika Brewing Company, Taimuraz Bolloev, is inclined to see “lobbying of vodka producers” behind all the attacks on beer by officials and deputies. In particular, this is how he explained the ban on the use of people in “beer” commercials recently adopted by the State Duma, complaining that this would “delay the growth of the market.” Director of Bravo International Viktor Pyatko makes it clear that “beer persecution” can objectively be beneficial to “vodka drinkers,” although he admits that there is no evidence of competitors’ participation in this.
As Pavel Biryukov noted, it is mainly not the persecution itself that hits the market, but the use of it in “black PR” by competitors. “A negative image of brewers is created so that less beer is bought,” says Bolloev.
“If there had not been a continuous and significant increase in excise taxes on vodka, as well as various restrictions on the places of its sale, the Russian brewing industry would hardly have developed at such a rapid pace,” states AVK. TNK are winning on all fronts
But for now, the rapid growth of beer consumption in Russia and the relatively calm taxation regime are attracting large investments into the industry from transnational companies (TNCs), which control about 60% of the market and all large enterprises. At the same time, out of 400 breweries in Russia, ten produce 60% of production volume. All five largest beer concerns are represented on the Russian market: the Indian-Belgian SUN-Interbrew, the African South African Breweries (SAB), the Dutch Heineken, the British Scottish & Newcastle and the Norwegian-Danish Carlsberg Breweries A/S.
Now the market leader in Russia is Baltic Beverages Holding (BBH), which, according to various estimates, produces from 30 to 35% of Russian beer and owns the Baltika concern (production sites in St. Petersburg, Tula and Rostov-on-Don). BBN also controls OJSC Yarpivo, OJSC Pikra (Krasnoyarsk Territory), OJSC Zolotoy Ural, OJSC Chelyabinsk Beer. Carlsberg Breweries owns 50% of the shares of BBH and 50% of OJSC Vena - the process of transferring this enterprise to BBH is currently underway. The second half of the said holding is owned by Scottish & Newcastle through its Finnish Hartwall.
In second place is SUN-Interbrew - it owns eight factories: Bavaria (St. Petersburg), Ivanovo Brewing Company CJSC, Klin Brewing Plant CJSC (Moscow Region), Kursk Brewing Company OJSC, Perm Brewing Company OJSC brewing company", OJSC "Povolzhye" (Volgograd region), CJSC "Rosar" (Omsk) and CJSC "Saransk Brewing Company". According to analysts from Baltika and AVK, this holding accounts for about 12% of the market.
The share of other TNCs in the Russian market is still small: according to AVK, SAB, which owns the Kaluga Brewing Company (produces licensed varieties Holsten, Staropramen and Miller), occupies about 1.8%, the Turkish Efes Beverages Group (Moscow brewery "Prince Rurik Efes") -- 2.4%, Bravo International (recently purchased by Heineken and, in addition to its own Bochkarev brand, produces licensed Lowenbrau and Bear Beer) -- about 5%. Among the world's largest producers, such beer giants as Anheuser-Busch (USA), Ambev (Brazil), Asahi and Kirin (Japan) are not yet represented on the Russian market. Despite the fact that these manufacturers focus primarily on local and nearby markets, Anheuser-Busch, for example, has already announced its interest in entering the Russian market. In this regard, experts predict fierce competition and a marketing battle for consumers, especially between BBH and Heineken. The latter, according to Bravo International director Viktor Pyatko, does not intend to limit itself to one plant. But BBH has begun construction of factories in Khabarovsk and Samara and is considering the possibility of launching a similar project in Central Asia. The Russians are not giving up
As for Russian beer producers themselves, analysts are unanimous: most of them are in a difficult financial situation and have no choice - they need to either “sell out” to concerns or leave the market. The cost of production at small breweries, according to AVK, is three to four times higher than in large companies.
Nevertheless, the largest “unsold” successful plant remains Ochakovo, occupying 9% of the market and remaining in second place in terms of production volumes in Russia after Baltika. “Krasny Vostok OJSC has good prospects in the market, which is also one of the ten largest producers in Russia and produces about 8.2% of the drink,” says AVK. There are other Russian enterprises that hold their niche: the Novosibirsk VINAP plant, Irkutskpischeprom, the Beer and Soft Drinks Plant in Bashkortostan, as well as the St. Petersburg Stepan Razin. “Without foreign investment, only those who enlisted the support of local authorities were able to survive and develop successfully,” according to AVK.
According to the same company, we can expect two “purely Russian” beer holdings to appear on the market in the near future.
One of them began to form the Wimm-Bill-Dann concern the year before last. Now the company claims that the beer assets have been sold to third-party shareholders, but many market participants believe that through affiliated companies Wimm-Bill-Dann has a controlling stake in the largest producer in the Far East, OJSC Beer Industry of Primorye, and the Nizhny Novgorod brewery, and is going to acquire a brewery in the Moscow region.
The Moscow beer and soft drink plant "Ochakovo" is thinking about a second holding: it has created a branch in Krasnodar and is showing interest in the Slutsk, Brest and Vitebsk breweries. The consumer prefers quality
The high quality of the product produced has spoiled Russian lovers of the foamy drink. “The segment of high-quality premium beer is now the fastest growing on the market, both in the part where high-quality domestic beer is positioned, and in the part of licensed brands. According to our estimates, this trend will continue in the coming years, and if now the premium segment occupies about 14.7% of the market, then by 2004 this share will increase to 19.6%,” Vienna marketers are convinced. “Among Russian beer, the greatest growth in sales was demonstrated by premium varieties, which include Baltika, Nevskoye, Klinskoye, Zolotaya Bochka, Bochkarev and Stary Melnik,” echoes AVK. The same company pointed out “Russians’ traditional preference for domestically produced beer, since the milder taste of imported beer is less consistent with the preferences of Russian consumers.” As Baltika marketer Pavel Biryukov noted, “we are now seeing a decline in interest in dark beers.”
Analysts disagree on whether we should expect new “high-profile” brands to appear on the market. For example, at Vienna the situation for creating new brands is considered favorable: “Russian beer consumers are not very loyal, they switch quite easily from one brand to another, they always want to try something new.” The head of Bravo International is convinced that the issue of promoting a new brand is a matter of budget. And Pavel Byuryukov believes that “a national brand is not launched - it is created over the years. Therefore, we can only talk about the strengthening of the positions of large brands in the coming years, their attempts to gain significant positions in most regions. So far, only the Baltika brand has succeeded in this, the share of which in almost all regions exceeds 10%.” Victor MATVEEV, St. Petersburg |
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