New Russian plant for Heineken?

- Last updated on GMT

Related tags: Heineken

Heineken, keen to increase its presence in the all-important
Russian market, is said to be considering a huge investment to
develop facilities in the Sverdlovsk region.

According to Russian news reports, the governor of the Sverdlovsk region, Eduard Rossel, says the Dutch brewer has sent a letter to him confirming its plans to build a brewery in the region. Although a specific site has not been confirmed, the total investment is believed to be in the region of $40-50 million.

Heineken​ has made no secret that it wishes to extend its footprint in the region and has been rumoured to be in negotiations with a number of Russian brewers in a bid to form a joint venture partnership. However, even if the Sverdlovsk investment has been confirmed by the company, no mention of a joint venture partner has been made at this stage.

Heineken's Netherland headquarters refused to either confirm or deny the claims made by Rossel.

"I can confirm that we are interested in making a substantial investment in Russia,"​ Heineken spokesperson Veronique Schyns told​. "However, the company cannot make any comment about what the governor of Sverdlovsk is quoted as saying in the Russian press."

Sverdlovsk region is situated in the south eastern part of Russia, in the midst of the Urals. The Urals is one of Russia's main maufacturing hubs, outside the Moscow region, and has traditionally attracted the aeronautical, pharmaceutical, oil and gas industries.

However Heineken's representation in Russia was more positive on the matter with general director Victor Pyatko claiming that it was "stupid to deny the obvious".

Currently Heineken is struggling to keep up with demand from its one St. Petersburg brewing facility. In 2003 Heineken carved up a 4.5 per cent share of the 74 million decalitre. Analysts believe that the cost of the proposed production facility would suggest a production capacity of 10 million decalitres, pushing capacity up to approximately 14 million decalitres. This would help the company to compete against other leading western names such as SABMiller, Interbrew and Carlsberg, who have all entered the market in the last few years as well as the larger national brewers.

Analysts have said that the likelihood of Heineken building a new facility in the Urals is strong. They believe that the brewer is falling behind its competitors in the race to increase production capacity. They believe that it is crucial Heineken moves ahead with its investment plans as soon as possible if it is to remain a competitive force on the market.

Despite Heineken being the leading brewer in Europe, it was a late comer to the Russian market, only buying up the St. Petersburg facility from Bravo International in 2002.

Related topics: Markets, Heineken

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