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Byelorussian beer market
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December 2005
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4/2004 Đîńńčéńęčé č óęđŕčíńęčé đűíęč ďčâŕ. - Russian beer market

Contents :
Total information
Beer market segmentation
Export-Import
Information about main producers
    BBH Russia
    •  «Baltika Brewing Company» JSC
    •  Export of “Baltika Brewing Company” JSC
    •  Group of “Yarpivo” companies
    •  “Vena” JSC
    •  “Pikra” JSC
    •  “Zolotoy Ural” JSC
    SUN Interbrew
    “Krasny Vostok - Solodovpivo” JSC
    “Ochakovo” Beer and Soft Drinks Plant” CSC
    Heineken Russia
Conclusion

Total information

The main share of beer produced in Russia (approximately 66%) belongs to companies with foreign capital (Carlsberg, Interbrew, Heineken, Efes and SABMiller).
The largest producer in the Russian beer market is Baltic Beverages Holding AB (BBH). BBH produces 35% of Russian beer. Its leading enterprise is “Baltika Brewing Company” JSC which owns breweries in St. Petersburg, Tula, Rostov-on-Don, Khabarovsk and Samara. On results of the first half-year of this year the share of the company "Baltika" in the Russian beer market amounts to 20%. Besides BBH (St. Petersburg) possesses control stocks of the group of companies of “Yarpivo” (“Yarpivo” JSC (Yaroslavl) and “Voronezh Brewery” JSC), "Vena” JSC (St. Petersburg), "Pikra" JSC (Krasnoyarsk) and “Zolotoy Ural” JSC (Chelyabinsk). The second producer by production volume is SUN Interbrew company with the market share of 16% which owns eight plants all over Russia: "Povolzhie" JSC (Volgograd), "Rosar" (Omsk), "Klinsk Brewery" JSC, "Ivanovo Brewing Company" JSC, "Kursk Brewing Company" JSC, "Perm Brewing Company" JSC, "Saransk Brewing Company" JSC and "Drinks Plant" (Novocheboksarsk, Chuvashia Republic).

The rest part of the market is divided among companies “Ochakovo” Beer and Soft Drinks Plant” CSC (Moscow) with two branches in Krasnodar and Penza (according to the totals of 6 months of 2003 the Russian beer market share c ? me to 6%), "Krasny Vostok - Solodpivo" JSC (7%) ("Krasny Vostok - Solodpivo" JSC (Kazan) and “Siberian Brewing Company” (Novosibirsk)), "Heineken Russia" (5%) (“Heineken Brewery”, the brewery "Shihan" (Sterlitamak, Bashkortostan Republic) and the brewery "Volga" (Nizhni Novgorod)), "Moscow-Efes Brewery" CSC (4%), “Stepan Razin Brewery” (2%), "Kaluga Brewing Company" JSC owned by SABMiller (2%) and other less large breweries.


In total there are about 300 brewing companies in the Russian beer market but a number of large breweries among them - no more than 20. In the opinion of analysts a number of small and medium brewing enterprises will be reduced year by year that is connected to growing consolidation of the market by leading companies. Now 10 leading companies supervise almost 90% of the market of the largest Russian cities and 10 plants - more than 60%.


On the results of January–July, 2004 enterprises of the Russian brewing branch increased production volumes by 13% in comparison with the same period of the last year and produced 51.2 million hectoliters of beer. According to the Union of Russian Brewers (URB) in 2003 Russia produced 75.7 million hectoliters of beer that was 7.8% more than in 2002. Last year eleven largest brewing companies in Russia produced about 55 million hectoliters of beer that makes 72.5% of the Russian beer market. Other 290 small and medium breweries occupy accordingly 27.5% of the market. Under the forecasts of URB in 2004 Russia will increase beer production by 7% as contrasted to 2003.


During several years the Russian beer market was considered as one of the most dynamically developing beer markets in the world. First the branch showed the essential production growth (25%) in 1997 that was caused by recovery of the economics, increase of competitive activity in the branch and decrease of the excise. Even despite of the crisis in 1998 beer production increased by 28% and in 1999 the maximal increase of production (almost by 32%) was fixed. However after maximum-demand 1999 the rates of growth started to decrease. Change of the dynamics of the industrial growth in the brewing branch took place in 2001. So in 2000 the growth amounted to 22.7%, in 2001 - already to 14.7%, in 2002 - to 11.7%, and in 2003 - only to 7.8%.



Under forecasts of brewers the annual increase of the market comes on stable 5-7% and this dynamics will be kept the nearest three - four years. Major factors that caused the deceleration of growth rates are an excise policy of the state, the decrease in consumer ability of the population, introduction of new limitations of the Russian brewers activity in the markets of some CIS countries. Also the branch is influenced also with tendencies which are total for whole economics. For example it is the increase of transport tariffs and energy supply tariffs.
Besides these factors there is an only Russian factor of influence, this is "vodka" traditions of the Russians. The preference of beer to strong alcoholic drinks is especially expressed in Russian regions with weak economics. But in whole priorities of Russian consumers vary more and more aside beer - in 2001 its share came to 20.5% of the total consumption of alcoholic drinks in Russia, in 2002 - 22%, and in 2003 that index rose up to 24.1%.



Many analytics explain also the decrease in the growth rates of the Russian beer market by its approach to saturation but generally this tendency is characteristic for the most significant and perspective regions of the Russian Federation. Now index of beer consumption volume in Russia is still behind European one and makes 50-51 l per capita occupying only 16 position among the countries which are beer consumers and in principle it is not necessary to speak about saturation of the market, however in key regions such as Moscow, Saint Petersburg and the other largest cities - consumption of beer is much more than all over Russia. So in the central Russia beer consumption per capita makes over 65 l and in the Far East makes about 40 l. According to estimates of experts in marketing there are all opportunities to increase consumption volume up to 73 l per capita in the Russian beer market during the nearest 2-5 years that is the market should grow by 50%. The further growth of the market is connected first of all with predicted increase in incomes of the population. The greatest potential of the growth is predicted by experts in the Ural, the Far East and the Siberian markets. Now the Siberian beer market is very dynamical and it is in constant development. Under the data of the Institute of research of goods turnover and wholesale market opportunities during the last year in tote the growth of beer production all over Russia amounted to about 10% and in Siberia - whole 20%. In this connection financial investments in accretion of capacities change the geography. Brewers do not aim only to confirm the presence in the market of the Capital but also to strengthen or even to work up new positions in regions.

So for example last year one of the largest Russian beer producers "Krasny Vostok - Solodpivo" JSC put into operation a new plant in Novosibirsk (the capacity makes 3 million hectoliters of beer per year). “Ochakovo” Beer and Soft Drinks Plant” CSC, possessing three plants in Moscow, Krasnodar and Penza yet, constructs a new enterprise in Tyumen. Total of investments planned by the management of the company in the project makes $40 million. The construction should begin in summer of 2005 and come to the end by 2006. Turkish holding Anadolu Efes via "Moscow-Efes Brewery" JSC in 2003 bought the Ufa brewery "Amstar" JSC and after that opened one more brewery in Rostov-on-Don. This year the Dutch brewing company Heineken bought for 80 million euro the Russian brewing holding “CEBC” (“Central European Beer Company”) which owns two large plants (the brewery "Shihan" (Sterlitamak, Bashkortostan Republic) and the brewery "Volga" (Nizhni Novgorod)). At the preparation of the article for print we got to know the fact that the company Heineken had purchased the Novosibirsk brewery “Sobol Beer”. Within five years Heineken is planning to invest in “Sobol Beer” 20 million euro and to increase its production volume up to 1.7 million hectoliters of beer per year.

Beer market segmentation

Under the data of the marketing agency "Business Analytica" in 2003 following dynamics of beer cost fluctuation by the price segments was marked: licensed beer had the greatest rise in prices (6%), prices in the mainstream and premium segments increased by 3.3% and 4.6 % accordingly, low-priced sorts of beer rose in price by 3%.*



For 2003 production of licensed beer grew from 1.422 up to 2.889 million hectoliters in comparison with 2002. The gain of production in this segment in the first quarter of 2004 amounted to 105% as contrasted to the same period of the last year. For the last year the share of licensed sorts of beer increased by 2.2% and in the first quarter of 2004 amounted to 5.1% of total volume of the market. In the first quarter of 2004 licensed and premium types of beer occupied 28.7% of the market by sales volume. These two segments covered already 39.1% by cost. At the same time the share of mainstream beer makes 51.9%.

In the first quarter of this year the premium segment grew by 2.8% in comparison with the same period of the last year. Thus the growth of premium beer production came to 33.87% during the same period.

During two last years the share of low-price types of beer remained stable and made 10-11% of the market. This segment is supported due to regional and also some large companies basically, a marketing policy and resources of which allow to produce low-price brands.



For the last two years distribution of sales varied with package quite dynamically. So for today canned beer is the most high growing segment in Russia. Under the data of «Business Analytica» from 2002 to the first quarter of 2004 the share of canned beer grew by 5.7% and for that time production of can in absolute means grew by 101%. At the same time production of beer in PET-package increased by 43.6%. The increase of these two segments was due to reduction of sales of beer in glass bottle which share decreased by 13.9% (production decreased by 12.3%). According to the agency most likely the share of beer in glass bottle will keep about the half of the market of beer in package.

Changes of sales volumes depending on package were connected to dynamics of change in prices in these segments basically. At the same time the growth in prices of canned beer corresponded to the growth in prices of beer in glass bottle practically (the growth of 12.6%) and active promotion from the direction of producers of package and beer provided to canned beer high popularity among consumers. The price of beer in PET-package grew insignificantly (the growth of 2.9%).

Export - Import

Export of the Russian beer grows constantly. So in 2000 export of beer amounted to 0.24 million hectoliters. In 2002 export of beer already amounted to 0.55 million hectoliters. And in 2003 in comparison with 2002 it increased almost twice up to 1 million hectoliters. Under the data of URB export of beer from Russia in 2004? can be increased by 35-40% concerning the level of 2003. Russian beer is exported to 32 countries of the world. The largest deliveries exported to CIS countries. Deliveries to states of the Middle East, Central Asia are planned in the future. The share of imported beer to Russia for today is marginal and it does not exceed 2.5% of total volume of the market.

Information about main producers

BBH Russia

Baltic Beverages Holding was founded in 1991. Owners of the company are Carlsberg Breweries A/S and Scottish&Newcastle; Plc. in equal shares (50?50). In Russia ??? possesses 10 plants: “Baltika Brewing Company” JSC (five plants - in Saint Petersburg, Tula, Rostov-on-Don, Samara, Khabarovsk), the group of “Yarpivo” companies (two plants - “Yarpivo” JSC in Yaroslavl and “Voronezh Brewery” JSC), "Vena” JSC (Saint Petersburg), "Pikra" JSC (Krasnoyarsk) and “Zolotoy Ural” JSC (Chelyabinsk). ??? is a leader of the Russian beer market which share for the first half-year of this year is 32.3% of the Russian beer market.

According to the company sales volume of enterprises of BBH in Russia in the first half-year of 2004 amounted to 13.52 million hectoliters of beer that was 8.2% more than in the same period of the last year. In 2003 enterprises of BBH in Russia sold 25.09 million hectoliters of beer.
In spring of this year BBH declared plans of pooling of the brewery «Vena» and the brewery «Zolotoy Ural». BBH plans to finish pooling in March 2005. The name of the joint company will be «Zolotoy Ural». The market share of the joint company under the various forecasts of analysts will come to 4-4.9%. In 2003 these two companies occupied 3.6% of the Russian beer market together. BBH also declared plans of consolidation of all Russian branches in the future with a view of controllability improvement, optimization of distribution and minimization of tax deductions.

«Baltika Brewing Company» JSC

«Baltika Brewing Company» JSC is one of the largest beer producers in Russia. «Baltika» company consists of breweries in Saint Petersburg, Tula, Rostov-on-Don, Samara, Khabarovsk, 32 sale divisions, «Soufflet Malthouse St. Petersburg», a new malthouse in Tula. «Baltika» company makes 32 different sorts of beer. According to the United Financial Group (UFG) last year «Baltika» occupies 20.7% of the Russian beer market. By the results of the first half-year of 2004 the share of the Russian beer market of «Baltika» is 19.7%. Main brands of «Baltika Brewing Company» are «Baltika», «Arsenalnoe», «Parnas», «Don».
In August of this year «Baltika» put into operation the new malthouse in Tula. The capacity of the new enterprise is 105 thousand tons of malt per year. Investments volume in construction of the malthouse in Tula amounted to $32 million. Under the forecasts of analysts the new malthouse will cover own needs of «Baltika» occupied with malt by 45%. If in addition to take into consideration the malthouse of «Baltika» in St. Petersburg the company will be provided with own malt by 70%.

In the first half-year of this year "Baltika" company sold 8.84 million hectoliters of beer that is 10.8% more than the same index of 2003. Last year the brewing company "Baltika" increased sales of beer almost by 0.7% (16.17 million hectoliters of beer against 16.06 million hectoliters in 2002). In tote the growth of sales of "Baltika" in 2003 was behind of the growth of whole Russian beer market which for the last year increased by 7.8%. The decrease in rates of production build-up is explained by that in 2003 organizational reorganization of the company was put into effect, process of reorganization of distribution system was started, change of the marketing policy was started, two new breweries in Samara and Khabarovsk were started, new equipment were put into operation at the new plant in St. Petersburg, a construction of warehouse depots was kept on and the project of a construction of the new malthouse was put into operation. As a consequence all these processes made significant growth of costs and put to deceleration of growth rates of sales and production.


In 2003 volume of investments of the company in development amounted to $149 million that was less than a level of the last year. Total investments volume in development of the company comes nearer to $1 billion. In the current year investments are directed towards increase of capacities, modernization of the equipment, improving of production quality and decrease of transport charges.

«Baltika» company came out on top by sales of draught beer in Russia. In comparison with the last year the company increased sales of KEG beer almost by 50% having run up to 16.7% of the draught beer market share by August. During this summer 0.25 million hectoliters of draught beer were sold. In comparison with 2003 in the structure of sales of «Baltika» the PET beer share grew from 5% up to 40% and the canned beer share grew from 1% up to 12%.

In the second half-year the company became a leader in premium and mainstream segments with the market shares of 22% and 30% accordingly. «Baltika» also continued to increase its presence in license and low price segments. Production of «Fosters» the second license mark of beer will be started in autumn. It is the Australian brand of beer in the premium segment. Till now «Baltika» made only one kind of licensed beer Carlsberg. Russia came out on top by sales of this brand in Eastern Europe. Tasks of the company for 2004 are running up to 20% of the draught beer market share in Russia, further improvements of service quality for consumers and expansion of production range in license and premium segments.

Export of «Baltika Brewing Company» JSC

Production of «Baltika» company is sold in 32 countries, these are practically all countries of CIS and also foreign countries. In 2003 sales volume of export beer of the company amounted to 0.992 million hectoliters (total production volume of the company is 16.17 million hectoliters) that is 9% more than the same index of the last year. The share of export sales in total sales volume of the company in 2003 made 6%. Last year new markets were developed and the first deliveries were to Canada, Cyprus, the Incorporated Arab Emirates, Iran.
In 2004 «Baltika» continues to increase volumes of export. In the first half-year of this year «Baltika» increased export deliveries by 15.2% as contrasted to the first halfyear of 2003 up to 0.57 million hectoliters. This year «Baltika» plans to begin direct deliveries to new countriesimporters: Poland, Denmark, France, Ireland, Belgium, Lebanon, Brazil, Costa Rica, Australia, New Zealand, China, Taiwan, India.

Group of «Yarpivo» companies

The group of «Yarpivo» companies includes «Yarpivo» JSC in Yaroslavl and «Voronezh Brewery» JSC. On the results of the first half-year 2004 the share of the group of companies «Yarpivo» in the Russian beer market amonted to 6%.

«Yarpivo» JSC was founded in 1975 and incorporated in 1993. The main shareholders of the joint- stock company are the workers of the enterprise and BBH (60% of shares). The decision about strategic investment co-operation between «Yarpivo» JSC and ??? was made in 1996.

«Voronezh Brewery» was built in 1936. In 1976 the Voronezh Production Association of Beer and Soft Drinks Industry was created on its base, later it was transformed in «Voronezh Brewery» JSC. In May «Yarpivo» JSC bought 77.8% of the authorized capital stock of «Voronezh Brewery» JSC. Now capacities of «Voronezh Brewery» are charged by 60% that makes about 0.5 million hectoliters of beer per year.

Total investments volume of the group of companies «Yarpivo» in modernization of production in 2004 will exceed $33 million. The main directions of investments are a bottling lines revamping, a reconstruction of the CKT and also reconstruction of the elevator and a modernization of other objects.

In the first half-year of 2004 the group of companies «Yarpivo» sold 2.61 million hectoliters of beer that was 10.8% less than the same index of 2003. In 2003 sales volume amounted to 5.7 million hectoliters of beer. By the results of 7 months of 2004 «Yarpivo» company occupies the third place by draught beer sales in Russia keeping 3% of the draught KEG beer share in the Russian market. For today the range of the group of companies «Yarpivo» consists of brands «Yarpivo», «Volga» and «Slavnoe».

«Vena» JSC

The brewery «Vena» was founded in 1872 in St. Petersburg. «Vena» JSC was created in 1992. Trade delegations of the brewery are situated in Moscow, Rostov-on-Don, Ekaterinburg, Nizhni Novgorod and Chelyabinsk.
In June, 2004 the investment project of modernization and expansion of capacities of the brewery «Vena» which was started in June, 2002 was finished, its cost came to $20 million. Consequently production increased up to 3 million hectoliters of beer per year. Realization of the investment project touched on practically all production, bottling and storage capacities of “Vena”.
For the first half-year of 2004 0.84 million hectoliters of beer were sold by the brewery «Vena» that was 34.5% more than parameters of the same period of the last year. In 2003 sales volume of beer grew by 20.5% in relation to 2002 and amounted to 1.38 million hectoliters. Production volume in 2003 made about 1.4 million hectoliters (1.8% of beer production in Russia).


Now the brewery «Vena» makes 5 trade marks of beer among which are the Russian premium beer «Neva», the Russian premium beer «Triumph», the Russian premium beer «Kronverk Nonalcoholic», the licensed beer «Tuborg», the licensed beer «Nikolay Sinebrjuhoff». In October 2004 «Vena» JSC starts to produce under license the French beer «Kronenburg 1664».

«Pikra» JSC

Pikra» JSC (Krasnoyarsk) is the largest beer producer in Eastern Siberia. The brewery «Pikra» appeared in 1991 and was founded on the basis of the Krasnoyarsk brewery.
In 2002 wide reconstruction of all production came to the end, high manufacturing equipment was installed at the plant. Now the company puts much money in improvement of quality and in increase of production volumes. This year capacities of the enterprise should increase by 15% and investments in development will make almost 8 million euro. By the results of the last year the share of «Pikra» in the Russian beer market made 1.3%. By the end of 2004 «Pikra» is going to increase its market share by 0.4% up to 1.7%.

For the first half-year of 2004 «Pikra» JSC sold 0.55 million hectoliters of beer that was 17% more than the index of the same period of the last year. Last year sales volume increased by 37% in comparison with the last year and amounted to 0.996 million hectoliters. The market share of «Pikra» in Krasnoyarsk makes more than 50%, in the beer market of Eastern Siberia and the Far East the share of Krasnoyarsk brewers makes more than 10%. Today «Pikra» JSC produces three main brands in different price segments. These are low priced beer «Stariy Droog», beer «Kupecheskoe» and new brand «Legenda». It also distributes more expensive popular brands «Neva» and «Tuborg» in the region.

«Zolotoy Ural» JSC

The brewery «Zolotoy Ural» (Chelyabinsk) was founded in 1969, since 1999 it is under the control of BBH. Now the company takes the fourth place in the Ural region.

In 1999-2003 the plant was reconstructed completely that increased the capacity of the enterprise from 1 up to 2 million hectoliters of beer. Total volume of investments in the reconstruction of «Zolotoy Ural» JSC made $50 million. Sales volume of «Zolotoy Ural» JSC for six months of 2004 amounted to 0.72 million hectoliters of beer (the growth made 33.3%). In 2003 the brewery sold 1.26 million hectoliters of beer (it amounted to 1.7% of beer production in Russia). By the results of 2003 «Zolotoy Ural» showed the highest growth of production and sales volumes among whole brewing branch of Russia, it amounted to 70% as contrasted to 2002. Production of the company «Zolotoy Ural» is mainly in mainstream and low price segments. Now «Zolotoy Ural» makes three types of beer «Zolotoy Ural», «Uralsky master» and «Chelyabinskoe» and occupies about 9% of the Ural beer market.

SUN Interbrew

SUN Interbrew company is the second-largest brewing company of Russia and the main competitor of «Baltika» company. In 1999 SUN Interbrew consolidates Russian and Ukrainian breweries owned by the Belgian brewing company Interbrew and the Indian investgroup SUN Trade. In August of this year Interbrew bought out stocks of SUN Trade and now it owns 75.5%. In July in the open market the Russian financial group «Alpha-Eco» consolidated the other part. Now it owns 15% of voting actions of SUN Interbrew.
The market share of the company in 2003 made 13%. According to the research company «Business Analytica» the share of SUN Interbrew in the Russian market of packed beer increased from 12.3% up to 15.84% for that year. In Russia SUN Interbrew consolidates 8 brewries «Povolzhie» JSC (Volgograd), «Rosar» (Omsk), «Klinsk Brewery» ?SC, «Ivanovo Brewing Company» JSC, «Kursk Brewing Company» JSC, «Perm Brewing Company» JSC, «Saransk Brewing Company» JSC and «Drinks Plant» (Novocheboksarsk, Chuvashia Republic).

In July of this year SUN Interbrew company made a decision to sell the share (almost 100%) of «Bavaria» JSC (St. Petersburg). As it is informed in the press-release of the company this decision was made according to the plans of optimization of production placement. The plant «Bavaria» was bought by its management.
The company SUN Interbrew considers variants of a beer plant construction in Irkutsk area.

Total beer sales volume of the company SUN Interbrew in Russia for the first half-year of 2004 reached 6.82 million hectoliters and grew by 37% in comparison with 4.98 million hectoliters for the first half-year of 2003 while total volume of the Russian beer market grew by 14%. Under the statement of the vice-president of SUN Interbrew in Russia Irina Kibina the growth of sales of SUN Interbrew is connected to distribution system development and accent on license and premium Russian sorts of beer. So according to the data of the company on results of the first half-year of 2004 sales volume of the brand «Stella Artois» grew by 58%, «Staropramen» grew by 60%, «Klinskoe» grew by 38%, «Sibirskaya Korona» grew by 90% in comparison with the first half-year of 2003. Sales volumes of beer in PET package in the first half-year of this year increased by 43% in comparison with the same period of the last year. These results followed in many respects from successful enter of new packing types and new sorts.

«Krasny Vostok — Solodovpivo» JSC

«Krasny Vostok — Solodovpivo» JSC is the third company by the share in the Russian market of beer.
«Krasny Vostok — Solodovpivo» JSC (in April, 2004 «Krasny Vostok» JSC, «Solodovpivo» JSC, «Cheshsky standard» JSC were consolidated into the enterprise «Krasny Vostok — Solodovpivo» JSC) and now includes two breweries «Krasny Vostok — Solodovpivo» JSC (Kazan) and «Siberian Brewing Company» (Novosibirsk). $118 million were invested in the construction of «Siberian Brewing Company», the capacity of the plant amounts to 3 million hectoliters of beer per year with future prospect to increase the capacity twice as much.
«Krasny Vostok — Solodovpivo» JSC produces 6 million hectoliters of beer annually, its potential capacity of the company makes 13 million hectoliters.

Due to modernization and expansion of capacities of the Kazan brewery «Krasny Vostok» for the last ten years beer production volumes grew more than 20 times. About 7% of the Russian beer market falls to the share of the company. Thus the market share in Tatarstan comes to 52%. Plans of the company are to increase the market share of «Krasny Vostok — Solodovpivo» JSC in Russia up to 10% by 2008.
Besides beer production «Krasny Vostok — Solodovpivo» JSC controls the significant share of the brewing barley market in Russia and also takes strong positions in the brewing malt market (malt production volume in 2003 exceeded 70 thousand tons). In the near future the company plans to expand malt production. It is planned to start a construction of a new malthouse with the capacity of 50 thousand tons of malt per year in Novosibirsk. Sum of investments in the project will make about $22 million. Besides in the long term it is planned to construct a malthouse with the capacity of 100 tons of malt per year in Kursk area.

Under the data of UFG in the first half-year of 2004 «Krasny Vostok — Solodovpivo» JSC produced 2.75 million hectoliters of beer (the growth amounted to 7.9% concerning to the first half-year of 2003). On the results of 2003 enterprises of «Krasny Vostok — Solodovpivo» JSC produced 5.51 million hectoliters of beer.
For today «Krasny Vostok — Solodovpivo» JSC produces more than 30 sorts of beer (brands: «Krasny Vostok» (6 sorts), «Cheshsky Standart» (3 sorts), «Solodov» (4 sorts), «Siberia» (3 sorts)). Till 2005 at the Novosibirsk plant it is planned to start production of premium beer of the brand «Solodov». Now the Novosibirsk plant produces 13 sorts of beer in total.

«Ochakovo» Beer and Soft Drinks Plant» CSC

«Ochakovo» Beer and Soft Drinks Plant» CSC takes the fourth place in the Russian beer market. According to the agency «Business Analytica» by the results of the first half-year of 2004 the market share of «Ochakovo» company amounted to 6%. «?chakovo» is a title brand of the company, it takes the second place in the Russian beer market with the market share of 5.77%.
The enterprise was started in operation in 1978. In 1993 «Ochakovo» Beer and Soft Drinks Plant» was transformed into the closed joint-stock company where workers of the enterprise own 100% of shares. A reconstruction of brewing production was finished in 1999 and now the enterprise can make 6 million hectoliters of beer per year. After the reconstruction of the main plant «?chakovo» launched a construction of regional branches. Now two plants are started in Krasnodar and Penza a building of a plant in Tyumen is continued. A new malthouse with the capacity of 100 thousand tons of malt per year was started in Lipetsk in September 2003, the second one with the same capacity will be started in Belgorod at the end of 2004.

«Ochakovo» Beer and Soft Drinks Plant» CSC in Krasnodar was set in operation in October 2000. Brewing production ran in October 2001. Now capacities of the plant allow to make 40 million hectoliters of beer per year.
Start-up of the second step of beer production at «Ochakovo» Beer and Soft Drinks Plant» in Penza is ordered on the fourth quarter of 2004. The estimated capacity of the Penza branch of «Ochakovo» comes to 2.3 million hectoliters of beer per year. Total volume of investments in the project comes to $55 million.

The third branch of «Ochakovo» is built in Tyumen. Completion of a construction of a beer line is planned in the second quarter of 2006. The power of the plant is 1.2 million hectoliters of beer.

Sales volumes of beer «Ochakovo» Beer and Soft Drinks Plant» for 6 months of 2004 amounted to 2.72 million hectoliters that was 2.4% more than the same index of 2003. In 2003 beer production volume of «Ochakovo» Beer and Soft Drinks Plant» was 7% of beer less than in 2002. According to the company data during 2003 beer production decreased from 5.72 million hectoliters down to 5.32 million hectoliters. In the mean time sales volumes of the company in money terms grew by 23% that is connected to the increase in sales of other groups of drinks

Heineken Russia

The group of companies of the Russian division of the Dutch concern Heineken (Heineken NV) includes «Heineken Brewery» JSC in St. Petersburg, the brewery «Volga» in Nizhni Novgorod and the brewery «Shihan» in Sterlitamak (Bashkortostan Republic).

The brewery «Bravo International» (St. Petersburg) was bought by Heineken NV in February 2002. In March 2003 the brewery «Bravo International» was renamed as «Heineken Brewery» JSC.
Release of the first parcel of the brand «Bochkarev» took place in 1999. Now the enterprise produces such Russian brands of beer as «Bochkarev» (4 sorts: Svetloe (Light), Bochkovoe, Krepkoe (Strong), Nonalcoholic), «Ohota», the licensed Bavarian beer Lowenbrau, Buckler, the imported Irish beer Myrphy’s and the Dutch beer Amstel. In March 2003 «Heineken Brewery» started to produce a sort of beer with the same name. The capacity of the plant amounts to 5 million hectoliters of beer per year.

Under the data of UFG for the first half-year of 2004 «Heineken Brewery» produced 1.98 million hectoliters of beer that was 19.7% more than in the same period of the last year. In 2003 production volume of «Heineken Brewery» grew by 20% and exceeded 3 million hectoliters.

In February, 2004 «Heineken Brewery» put in operation a line for bottling beer in a 1.5 l PET-package made by the company KHS (Germany). Volume of investments in expansion of production amounted to 6.3 million euro. Rated speed of bottling makes to 30.6 thousand bottles per hour. Only one sort «Ohota» is produced at the new line. According to the statement of Mr. Roland Pirmez (the president of the companies of Russian division Heineken) the new line will allow to increase bottling beer «Ohota» capacities of the company more than twice.

In August, 2004 the company Heineken NV concluded an agreements on purchase of «Shinhan» Beer and Soft Drinks Plant» and the brewery «Volga» which was owned by the Central European Brewing Company (CEBC was formed as a brewing division of Vimm-Bill-Dann company) and thus increased its share of the Russian beer market up to 7.2%. It is possible that this fact will allow the company to become one of three leading beer producers in Russia.

The Dutch brewing company Heineken plans to invest about 100 million euro in recently bought plants «Shihan» and «Volga» within three years. The company expects to double capacities of these enterprises in 2004-2007 that allows to increase sales volume of the company in Russia up to 5.9 million hectoliters of beer per year.
The brewery «Shihan» is situated in Sterlitamak (Bashkortostan Republic). Its capacity makes 1.4 million hectoliters per year. The enterprise controls 24% of the republic beer market. The brewery produces three brands «Shihan», «Sedoy Ural» and «Solyanaya Pristan». In 2003 sales volume amounted to 1 million hectoliters of beer.

«Volga» brewery situated in Nizhni Novgorod. The capacity of the brewery amounts to 0.8 million hectoliters and the beer market share in Nizhni Novgorod amounts to 40%. The brewery produces three brands «Okskoe», «Volga» and «Rusich». In 2003 sales volume of «Volga» brewery came to 0.7 million hectoliters of beer.
Conclusion

The Russian beer market is considered as one of the most perspective in the world even in spite of the fact that initial impressing growth rates of the Russian beer market of 25-30% were replaced by more stable ones of 7%. Under the forecasts of analysts during the nearest three — four years activities of the growth rate will make 5-7%.
The growth of the Russian beer market changes its geography. In key regions of Russia the beer market approaches to saturation along with it such regions as Ural, Far East and Siberia have an increasing potential of the growth.
At the same time the growth of the market is attended by the increase of its consolidation. Now 66% of beer made in Russia fall to the share of foreign companies (Carlsberg, Interbrew, Heineken, Efes and SABMiller). It is possible to expect that in the future the cumulative share of foreign investors will increase, probably due to new foreign players enter the market.
Now volume of beer consumption in Russia amounts to 50-51 litres per capita (Russia is on the 16-th place among countries beer consumers) but under the forecasts of experts in marketing till 2008 volume of consumption will grow by 50%.

* In 2003 inflation amounted to 12%.