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4/2005 Ðûíîê ïèâà Ìîëäîâû. Byelorussian beer market. Kazakhstan beer market - Byelorussian beer market

(abridgement)

Contents

The Postsoviet period
Belarus today
Brewing barley manufacture
Export - Import
Struggle against the "grey" import
Market segmentation
Classification of beer brands on popularity level
Program of development on 2003-2005
Main manufacturers
Conclusion

The Postsoviet period

In 1995-1999 Byelorussian brewing developed most dynamically. In 1996 the beer production volume growth came to 32%, and in 1997 - 8%. But already in 2000 the negative dynamics in the brewing branch was formed. For two years 2000/2001 beer manufacturing has fallen up to…

Stagnation became the result of the absence of a competent state policy concerning brewing branch. First, it affected the raw material…

Second, since 1990 brewing branch of the republic has practically stopped manufacture technical base renewal….

In 2001 Belarusian government made an attempt to support the branch, temporarily having cancelled the price control and having enabled brewers to work in the market economy conditions…

…Foreign investors already from the middle of 90th started to show their interest to the Belarusian brewing branch, and 2001 had the chance to become the most significant year for the Belarusian brewing. During this period to carry out the investment activity in Belarus intended three leading Russian brewing companies…

…Nowadays there is only one foreign investor in Belarus that is American company Detroit Investments Ltd (it owns wine company Vinorum and company "Ivan Taranov Brewing Association" in Russia)…

…Besides it there are also local projects in Belarus…

Belarus today

According to the data of the "Belgospischeprom" concern, for today the beer manufacture in Belarus fulfill 14 specialized enterprises (JSC "Krinitsa", JSC «Lida Beer», JV JSC "Rechitsabeer", JSC "Olivaria", JSC «Brest Beer», and also JSC «Polotsk Beer», JSC «Grodno Brewery», «Orsha Brewery», JSC "Mozyrbeer", JSC «Slutsk Brewery», JSC "Molodechnobeer", holding "Mogilyov", JCSC «Belarussian brewing company» (up to 2004 - JSC "Brewery " Dednovo"), "Vitebsk Beer") and 8 mini-breweries which industrial potential in the total amount of the beer manufacture is 1,2%...

Map ‛Enterprises of brewing industry in the Republic of Belarus

The unconditional leader of the beer branch is JSC "Krinitsa"… Besides the brewery "Krinitsa" the five of leaders of brewing branch includes JSC «Lida Beer»…, JSC "Rechitsabeer" …, JSC "Olivaria"… and JSC «Brest Beer»…

For the last year the capacities of brewing branch of the republic have essentially grown - on 9,5 million dal…

Chart ‛Shares of enterprises by beer production volumes in the Republic of Belarus in 2001, 2002, 2003, 2004‛

Chart ‛Allocation of brewing industry capacities by areas of the Republic of Belarus in 2004 (under the data of the concern ‛Belgospischeprom‛)‛

Chart ‛Allocation of shares of beer production volumes by areas of the Republic of Belarus in 2004 (under the data of the Ministry of statistic and analysis of the Republic of Belarus)‛

Chart ‛Dynamics of beer production by areas of the Republic of Belarus in 2004 in thousands dal (under the data of the Ministry of statistic and analysis of the Republic of Belarus)‛

Chart ‛Dynamics of beer production in the Republic of Belarus for 1995-2004‛

…According to the results of 2004 brewing capacities of the country involved the little more than a half…

The manufacture volume of all brewing branch of Belarus in 2004 was 22,7 million dal of beer…

…For the last years the brewing enterprises of the republic have showed such significant rate of growth for the first time… The similar rise of the manufacture became possible in the result of realization of some actions stipulated by the «Program of the brewing branch development of Belarus on 2003-2005». However, to achieve prediction parameters, by tradition, was not possible… Until there is an unsolved problem of the basic brewing raw material (that is qualitative barley) from year to year in Belarus…

…In 2004 the greatest growth of the beer manufacture showed the brewery "Krinitsa" - 44,9%. The others 4 leaders of the Belarussian brewing showed much more modest rates of the industrial growth…

…According to official statistics, the beer sales in Belarus in January - September of 2004 grew on 8,6% in comparison to the similar period of the last year… The beer manufacture volume in Belarus in January-September 2004 was…

…The mid-annual consumption level of beer in Belarus per capita in 2003 was approximately 20 liters, and in 2004 increased up to 22-24 liters. In a reality, the average Belarussian, taking into account the illegal import, drinks about 30 liters of beer per year. Thus, it is possible to ascertain, that…

Brewing barley manufacture

One of the biggest problems of the Belarussian brewing branch is a global deficiency of qualitative Belarussian brewing barley. The annual need of the Belarussian brewing industry for barley makes about 150 thousand t… It is necessary to say, that last years the basic malt manufacturer in Belarus - JSC "Belslolod" not once appeared in a deadlock situation… It was connected with the fact that the government of the republic tried to stimulate domestic barley manufacture in the form of an order…

…last years (except for 2004) Belarus regularly did not cope with the performance of its own plans on the brewing barley storage. As the result it was necessary to lift the bars on purchase not only of foreign barley, but also of import malt… In 2003 the plan on brewing barley was fulfilled only on 27%...

Chart ‛Dynamics of brewing barley production in the Republic of Belarus for 1999-2004‛

The main reasons of such bad harvest were…

…Somehow to find a way out from this situation, in 2003 the government of Belarus made a witty decision…

…the government has accepted the act «On the ordering of import and turnover of brewing barley in the territory of Belarus» of September, 5 2003. According to it…Thus brewing barley import to the country was practically forbidden.

…But the basic volume of the collected grain did not answer even "updated" government standards…

…Already after that one more step for the maintenance of the Belarussian breweries with local brewing barley was undertaken. In the republic the new purchasing policy began to operate... In the result the cultivation of brewing barley in Belarus conditions became a very good business, and farmings increased the areas under the crops intended for this culture…

…All this in a complex resulted to that at the need of the brewing branch enterprises for 150 thousand t., in Belarus in 2004… and the state order was exceeded on 6%…

…After such successful crop the government of Belarus made the decision to suspend a procedure of the import barley and malt tender purchases…

Export - Import

The beer export dynamic from Belarus has the negative character. Only some years ago to mark out the presence of the Byelorussian beer on a foreign market, brewing enterprises of Belarus had to follow the state export plan…

Chart ‛Dynamics of beer export from the Republic of Belarus for 2002-2004 (11 months) (under the data of the concern ‛Belgospischeprom‛)‛

Chart ‛Dynamics of beer import to the Republic of Belarus for 2002-2004 (under the data of the concern ‛Belgospischeprom‛)

The basic share of beer export of the republic is the deliveries to Russia…

In the export - import field the most difficult point of Belarus is the "not taken into account" import. Official beer import in 2003 was 1,44 million dal of beer… In the same time the informal statistics testifies, that the volume of the shadow beer import all these years remains at the level…

Taking into account the "grey" import, the basic importer to Byelorussia is the brewing company "Baltika"...

Meanwhile Belarussian authorities struggle not for the increase in the share at a foreign market of beer, but for the defending and returning to themselves the internal one…

…To the positive aspects of the Russian import expansion it is possible to relate…

Struggle against the "grey" import

With the purposes of the home market protection against the "grey" import last year the government of Belarus put a number of new beer importation and beer turnover regulations… …Before the beginning of the action of the above-stated decree for the beer importation to Belarus in volume over 10 thousand dal it was necessary to receive the single license…

…These restrictions have resulted in numerous protests on the part of the Russian Federation…

…Russia achieved the cancellation of the " import barriers " only in 2004. On the official point of view, the solution on the beer import licensing cancellation from Russia was accepted with the purposes…

…After the cancellation of the licensing the share of legally imported Russian beer has increased in some times… However, in such more or less free position the importers were only half a year…

…Alongside with already accepted measures the Byelorussian government brings the innovative (first-ever in its own way) method of the tax control. Since March, 18 2005 the special control symbol which should mark the production of not only importers, but also of the Byelorussian beer manufacturers is appearing…

…The authority decided to use this tool of because…

…Unconditionally, the new branded policy contradicts a number of obligations within the framework of the international agreements…

Chart ‛Dynamics of beer import to the Republic of Belarus in 2004 in thousands dal

Besides the importers, the entered innovation brought negative reaction of the Byelorussian brewing manufacturers…

…The last innovation in the field of an excise - beer policy took place in the republic in June 2003…

Market segmentation

The Byelorussian manufacturers in 2003 made about 170 kinds of beer…

…despite of constantly renewed and growing assortment of beer, the Byelorussian manufacturers strongly kept (and keep) their positions in the economy and midprice segments…

…Together with the incomes of the Byelorussian population the requirement of the consumer for beer of "premium" class also increased. In 2004 three of five largest brewing enterprises of Belarus started production of a premium segment…

…This year the segment of the premium Byelorussian beer will extend…

…Not a long time ago local nonalcoholic beer also appeared in Belarus…

Chart ‛Dynamics of beer production in the Republic of Belarus by package types in 2003, 2004

Great dynamic is observed in the beer manufacture distribution in the type of packing. The most fast-growing segment of the packaged beer in Byelorussia remains beer in plastic bottles…

Classification of beer brands on popularity level

According to the researches of the International agency of the social and marketing researches (IASMR) conducted in January - February 2004, among the Byelorussian beer the most known and the most consumed became…

…Proceeding from the geographical aspect, metropolitan sorts "Krinitsa" and "Olivaria" are the leaders in Minsk…

…Urban authorities often hamper the assortment expansion of the Byelorussian beer presented in separate local commercial network, and, hence, the increase of its popularity…

Program of development on 2003-2005

The significant turning point in the Byelorussian brewage became the acceptance in December 2002 of the global program of the brewing branches development. It is designed for a period up to 2006…

…Within the framework of the Program the modernization of 14 brewing enterprises started. The general investor of the project was "Priorbank"… Investors of the others brewing enterprises became other banks…

…According to the governmental forecasts, during the scheduled measures the republican powers on beer manufacture by the end of 2004 should increase up to 58,9 million dal, and the manufacture - up to…

…Looking at the last year results it is possible to ascertain, that the branch really began to develop, but not at such fast rates as it was planned…

…During the large-scale modernization of the enterprises in 2004 the industrial potential of the Byelorussian brewage grew essentially...

…If not to take the market into account and to continue the formal fulfillment of the program figures then as the result the majority of breweries, having failed to repay the credits, will appear on the verge of bankruptcy...

…As the experience shows, the national economy of Belarus can also develop at the expense of internal investments, but only not so fast as it would be desirable…

…According to the new drafting of the branch Program it is planned to…

Main manufacturers

Krinitsa JSC

JSC "Krinitsa" (Minsk) is the largest beer manufacturer in Belarus…

…The first stage of the reconstruction started by «Brewing Company «Baltika» in 2001, continued, and in 2004 more… At the enterprise the modernization of the cookroom was done, the new fermentation industry was created…

Chart ‛Krinitsa‛. Dynamics of beer production for 2001-2004‛

Lida Beer JSC

JSC «Lida Beer» (Lida) takes the second place on the volumes of manufacture in the beer market of Belarus…

…«Lida Beer», based in 1876, in 2000 was transformed into JSC. The enterprise has a private pattern of ownership…

Chart ‛Lida Beer‛. Dynamics of beer production for 2000-2004‛

Within the framework of the republican program of the brewing branch development for 2003-2005 the reconstruction of manufacture finished in September 2004 was conducted at the enterprise. New equipment was installed at JSC «Lida Beer»…

Rechitsabeer JV JSC

JV JSC "Rechitsabeer" (Retchitsa) takes the third place in Belarus on the beer manufacture volumes…

…At the end of 2000 JSC "Rechitsabeer" together with the Lithuanian company "A" created JV JSC "Rechitsabeer"…

Chart "Rechitsabeer". Dynamics of beer production for 2000-2004‛

…The modernization program figured up to 2005, provides brewing manufactures reconstruction with the increase in power from 4,1 million dal up to 5,5 million dal of beer annually…

Brewery Olivaria JSC

JSC "Brewery ‛Olivaria" on the production volumes of beer manufacture in Byelorussia takes the 4th place… The brewery began to produce beer in 1864. In 1994 the enterprise was transformed into JSC "Brewery "Olivaria"…

…At the end of 2004 the first stage of the reconstruction which was carried out since 2003 was finished at the enterprise. Within the framework of this stage of modernization the new equipment of Germany, Denmark, Belgium manufacture was installed at the brewery…

Chart "Brewery ‛Olivaria". Dynamics of beer production for 2000-2004‛

Brest Beer JSC

The brewery «Brest Beer» began its work in 1970, in 1971 on it put the malting manufacture into operation…

…Nowadays the technological reequipment of the brewing manufactures is carried out at the enterprise. For the enterprise reconstruction realization from 2003 85% of JSC «Brest Beer» shares are in the asset management of "Priorbank" which has granted a loan…

Chart ‛Brest Beer‛. Dynamics of beer production for 2000-2004‛

Foreign investment projects

Byelorussian Brewing Company JCSC

Today the only foreign investor which possesses the controlling interest of the Byelorussian brewing asset is the American company Detroit Investments Ltd…

…JSC "Brewery ‛Dednovo" is based on the basis of the Bobruisk brewery in January 2002…

…At the initial phase of the negotiations with the Byelorussian authorities DBBC was supposed to get 76% of shares of ‛Brewery ‛Dednovo‛, and 24% were to be taken by the state. But…

…International Financial Corporation (IFC), which is included into the structure of the World Bank, came out as a support and a kind of guarantee IFC agreed to invest about $3 million into modernization of ‛Brewery ‛Dednovo‛…

Kuntsevsky brewer (project name)

In 2005 it is planned to start building a new Byelorussian-Czech brewery in Grodno, on the territory of ‛Grodnoinvest‛. The new production start is planned for January 1st 2006. The founders of the new enterprise are a Byelorussian company ‛Convention-Invest‛ (its part in the collective investment fund amounts 60%), ‛Grodno Brewery‛ (9%) and a Czech enterprise ‛Kuntsevsky brewer, 1877‛ (Czech company ‛Aragast‛) (31%)…

…In the end of the previous year the Grodno authorities made a decision to support the local brewing enterprise in the production distribution. In the end of November a secret ban was imposed: in the Grodno trading network it was not allowed to sell beer which is not produced by the Grodno brewery…

Dvinsky Browar Ltd. JV

In May 2005 a new Byelorussian-German ‛Dvinsky Browar‛ will start beer production in Vitebsk.

‛Dvinsky Browar‛ Ltd. JV was created in March 2004. The founders of ‛Dvinsky Browar‛ were a private Byelorussian shoe enterprise ‛Marko‛ Ltd. JV (It has 31% in the collective investment fund of the enterprise), Vitebsk Executive Committee (30%) and a German production and trading company ‛Ewimex‛ (Ludwig Bourg, Germany) (39%)…

Minsk Beer JSC

In May 2005 a joint Byelorussian-Hungarian public corporation ‛Minsk Beer‛ is going to start a new brewery in a village Bolshoye Stiklevo (Minsk area)…

Conclusion

…A distinguishing feature of Byelorussian economic policy became an intensive development due to the internal reserves… It is clear that the policy the Byelorussian Government has chosen towards the brewing branch is still connected with great risks. It is true that the beer production volume considerably grew in the republic in 2004, but we should not forget the promissory notes which are behind the figures reached.

Unabridged version volume is 32 p., 19 pic. and charts.

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