SABMiller to stick with Russian expansion plan
burgeoning Russian beer market, though says it will not stray from
its current strategy of driving organic growth in the market.
Russia is becoming increasingly lucrative for brewers, particularly in the area of premium beers as the country's increasingly affluent consumers trade up from spirits to wine and beer. A spokesperson for SABMiller said yesterday that despite its ambitions in the country, the company had no current plans for acquisitions within the region, a policy that has remained unchanged over the last few years. "We will continue to pursue our successful strategy of organic growth on the Russian market," the spokesperson stated. In the last few months alone, the strength of the Eastern European beer market, of which Russia is a leading player, has seen consolidation from rivals such as Carlsberg, through the planned buy of the entire holding in the Baltic Beverages Holding (BBH) joint venture. SABMiller says that in moves to step up its own production output, construction of a second brewery within the country is already underway in the city of Ulyanovsk. The facility is expected to begin operations in 2009. The plant situated 1,000km from Moscow is set to have an initial capacity of 3m hectolitres, and will be used to step production of national brands such as Zolotaya Bochka, Velkopopovicky Kozel and its core Miller Genuine Draft beer. The expansion is expected to allow the company to better compete with rivals in quenching Russia's growing thirst for premium beers. Expansion of brewers like Baltic Beverage Holdings (BBH) into the country and shifting consumer tastes from spirits to wine and beer has helped contribute to a 17 per cent year-on-year increase in sales of premium beer, according to market analyst Canadean. The growing importance of the premium segment reflects wider optimism within the overall Russian beer market in recent years. Figures by market research group Euromonitor show that since 2000, cumulative market growth for the Russian beer market stands at 60 per cent. This growth has certainly be felt by SABMiller, which announced during the first half of the current financial year that its Russian operations alone had recorded an 18 per cent improvement in sales volumes over the six month period ending 30 September. In other key Eastern European markets like Poland and the Czech Republic, volumes growth was up by 13 per cent and three per cent respectively, the company said.