Russian optimism remains despite big brewers’ beer lull

By Neil Merrett

- Last updated on GMT

Related tags Eastern europe

Despite declining sales growth for leading brewers like Carlsberg and InBev in Russia, analysts and industry alike suggest that the country’s beer market is far from stagnating.

After major growth in recent years for domestic and imported beers, David Liston, beverage equity analyst for researchers Barclay’s Wealth, said that an expected slowdown had finally arrived. He stressed though that it was not a case of last orders for brewers operating in the country.

Liston, speaking to, said that while declining growth had perhaps arrived earlier than some had expected, Russian beer still shows healthy potential for growth and was far from becoming a mature market like its Western counterparts.

Brewer boon

In recent years, Russia had provided some of the world’s major brewers with an antidote to more stagnant growth in the more established Western European beer markets, as one of a number of emerging beer consumers along with China and India.

Market analyst Euromonitor said that the country posted a five per cent growth in beer sales volumes in 2007, amounting to 10bn litres of ale or €14.9bn. Over half of these sales represented the presence of three multinational brewers operating in the country, the analysts added.

However, claims by Carlsberg, which owns leading Russian beer brand Baltika, that third quarter sales volumes in the country had fallen slightly over the same period last year, suggest some difficulties may lie ahead.

Denmark-based Carlsberg, which has recently boosted its presence in the Eastern European market through the total acquisition of Baltic Beverages Holding (BBH), said that it still remained on track to meet full year targets.

Earlier this year, InBev itself cited tougher competition from Carlsberg for falling sales of its some of its lower-cost brands in the country.

Weather watch

Despite the current slowdown, Liston said that sales volume growth for the entire Russian market was expected to gradually increase on an annual basis over the next two years.

He claimed that it was unknown how these expectations would be impacted by the recent abnormally warm winters that had helped drive beer sales in the first and fourth quarters of the 2006 and 2007 financial years to perform above expectations.

Eastern Europe potential

Outside of Russia, additional markets in the Eastern European region such as Ukraine were also, despite some difficulties, showing strong beer growth over the last few years, Liston said.

In addition, less developed markets for beer consumption such as Belarus and Kazakhstan were also set to post huge levels of growth, though Listen stressed that this was from a low base.

Related topics Manufacturers Beer & cider

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