Belvedere back to the black in H1

- Last updated on GMT

Related tags: Russia, Europe

Strong performances in Poland and Russia helped French spirits
group Belvedere to end the first half of the year back in the
black, at the operating level at least. Further restructuring and
acquisitions in Eastern Europe also bode well for the company's
future.

Belvedere, the French company best known for its Polish vodka brands Sobieski and Zawisza, has seen its Central and Eastern European operations return to the black for the first time in the first half the year thanks to major restructuring efforts in that part of the world.

The company said that total sales rose by 53 per cent during the half to reach €102.4 million, with Poland alone accounting for 90.6 per cent of the total thanks to the acquisition and integration of the Starograd Gdanski distillery there. Last year, Poland accounted for 79.6 per cent of sales.

There was also considerable growth in the company's activities in Russia, which now accounts for 3.4 per cent of sales thanks to a 75 per cent increase in turnover there during the half.

In Lithuania, sales dropped from €5.7 million to €3 million as a result of Belvedere's decision to concentrate on high-margin wine sales and the subsequent reduction in brands sold there.

But Belvedere is essentially a spirits group, with 84 .4 pc of sales coming from that segment of the market compared to 8.9 per cent for wine, 5.5 per cent for raw alcohol and just 1.2 per cent from bottles (Belvedere was the company which created the striking bottle for the Polish vodka of the same name, now owned by Phillips Millennium).

Operating profit from the Russian, Polish hand Baltic operations reached €0.94 million during the first six months of the year, with only three of the group's western European subsidiaries (all of which are in the process of being sold or closed) impacting the figures with operating losses of €0.8 million. In total, operating profit for the group was €0.13 million.

Net losses were also lowered during the half, dropping from €3.64 million to €2.1 million, helped by one-off gains of $2 million from the settlement with Philips Millennium over the rights to the bottle design.

With the legal wranglings over the Belvedere and Chopin vodkas now behind it, the company has begun to concentrate on building its business, in particular by diversifying into other business areas. It ahs recently bought a Bulgarian winery, Menada, which produces around 2 million bottles a year, of which the majority are exported, but which has a total production capacity of around 20 million bottles.

The acquisition not only allows Belvedere to gain a substantial foothold in Bulgaria, but also allows it to use the Bulgarian wineries brand as a springboard for entering the wine market in other countries, in particular Poland where the group has big plans to raise its wine sales to the level of those achieved by its spirits brands.

While there are still question marks over the fluctuations in the economic fortunes of many of the countries in Central and Eastern Europe, the entry of many of these countries into the EU in just two years' time will provide major opportunities for companies with strong brands there.

Given the growing interest in Polish vodka, and in the fast-improving wines from that part of the Continent, Belvedere -which has a good track record in brand marketing - is well placed to make the most of likely future growth.

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