Heineken eyes regional growth with Czech purchase

By Neil Merrett

- Last updated on GMT

Related tags Eastern europe

Heineken has further extended its presence within the burgeoning
beer markets of Central and Eastern Europe with its
latest acquisition in the Czech Republic.

Through the purchase of the Kruovice Brewery from the Radeberger Gruppe, Heineken will now hold an eight per cent market share in the country with an output capacity of 1.6m hectolitres.

This will make it the third largest brewer operating in the Czech Republic.

The company did not specify the costs of the transaction.

Besides simply boasting a strong beer heritage, Central and Eastern Europe continue to offset stagnant growth in more established markets like Western Europe and the US for the product.

This has resulted in an increasing number of multinational brewers making rapid investments into the region over the last few years to tap this demand.

Last year, Czech beer consumption per capita was found to be the highest in the world at 159 litres per year.

Nico Nusmeier, president for Heineken's operations in Central and Eastern Europe, said the purchase would not only strengthen its presence within the country, but also allow it to maintain its sales growth within the overall region.

"The Kruovice brand is very popular among local consumers and we are confident that with appropriate commercial investment, this brand has clear potential to grow," he stated.

"In addition, we plan to further extend the excellent export position of the Kruovice brand by leveraging the reputation of Czech beers, particularly in Central and Eastern Europe."

The group expects the brewery, which it will be acquired through its existing cash resources, will be earnings enhancing by 2008.

The move comes as the company faces a hangover from an €219m fine imposed by the EU in April for allegedly breaching the bloc's competition laws.

The company insisted it would appeal against the decision, denying claims it had colluded with rivals over price fixing.

Despite the cartel accusations, the company still hopes to expand on what proved to be a great year in 2006.

This was the result of the strong global performance of its brands, particularly in its expanded operations in the region.

Of the group's five regional operations, Central and Eastern Europe boasted the highest consolidated beer volumes of 46.9m hectolitres.

This compared favourably to Western Europe, its second largest market, which boasted volumes of 32.1m hectolitres.

Related topics Manufacturers Heineken

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