Around 7.7 billion litres of beer were sold in Russia last year, according to data from market analysts Euromonitor, with premium lager accounting for just 500 million litres. But this represents compound annual growth of 35.5 per cent since 1998, and with growth forecast at around 19 per cent a year for the next five years - compared to around 6 per cent for the lager market as a whole - premium beers will continue to take the lion's share of Russian brewers' marketing budgets.
Perhaps surprisingly, most of the growth in premium lager sales has come not at the expense of standard lager brands (which showed equally as impressive growth of 26 per cent between 1998 and 2003) but rather at that of economy lagers, Euromonitor's Natasha Cazin told FoodandDrinkEurope.com.
This increase came despite the fact that large numbers of Russians (in particular those in remote regions and the rural parts of the country, where incomes remain lower than in the major cites) still prefer to buy the cheaper local brands, and reflects both the increasing purchasing power of a relatively small number of urban Russian consumers and, perhaps, more significantly, the marketing efforts of local market leader Baltika.
Owned jointly by Carlsberg and Scottish & Newcastle, Baltika still remains quintessentially Russian, and almost single-handedly it has been responsible for the rapid development of the beer market there, despite the arrival of high-profile foreign brewers such as Interbrew.
Dominated by the Baltika 7 brand, domestic premium lager is the fastest growing area in the Russian beer sector, according to Cazin, accounting for more than 70 per cent of total premium beer sales. Indeed, Baltika 7 holds a whopping 51.8 per cent of the market, while Baltika Zolotoe is the second-largest premium lager brand with 6.7 per cent and Sibirskaya Korona (from Sun Interbrew) is in third place with 4 per cent.
Sun Interbrew's more famous premium lager, Stella Artois, has just 2.7 per cent of the market, reflecting the distinctive Russian preference for local brands over imports. In most mature beer markets, imports dominate the premium end of the market, but imported premium lager volumes grew by just 13 per cent in 2003, compared to 41 per cent for domestic Russian brands, according to Euromonitor.
But the distinctly Russian flavour of the premium segment of the market is reflected in the way Baltika 7 is packaged. In western markets, premium lagers are increasingly sold in glass bottles as the most sophisticated packaging format, but Russian premium beers are still widely presented in cans - indeed, Baltika 7 is also sold in 5-litre presentation buckets as well as in kegs, formats more commonly seen for lower-priced beers in the west.
Premium lager is not the only growth market in Russia, however. The second fastest-growing area is non-/low-alcohol beer - a relative newcomer in a market renowned for its hard drinking consumers. Again, Baltika has been at the forefront of the market, proving that Russian consumers are happy to experiment with new beers if they are produced under a brand that they trust.
This has been all the more important, given that Baltika has had to create the non-/low-alcohol beer segment from nothing, although Cazin pointed out that the main boost in sales of such beers came in 2002-03, a year or so after Baltika first created the segment, as other players jumped on the bandwagon.
Nonetheless, Baltika accounts for 44 per cent of the non-/low-alcohol beer market, with smaller shares from players such as Yarpivo, Bravo International and Amstar. The arrival of other brands such as Buckler, the low-alcohol beer from Heineken, and Nevskoe Light from local player Vena, continues to drive growth in the market, and Euromonitor predicts that sales will grow by 15 per cent a year over the next five years as beer drinking habits continue to evolve.