E-Malt.com News article: 1555

Sun Interbrew, the Russia-Ukraine unit of Belgium's Interbrew and India's Sun group, said on September 10 it wants to buy two more plants in Russia as it tries to expand its market share, according to Reuters. "I would like to buy two breweries in the east," chief executive Joe Strella told reporters after presenting Sun Interbrew's forthcoming 2.5 billion rouble ($81.62 million) bond issue. "We have a concrete target." Strella has said he would like to buy breweries both to increase market share and provide staging posts for beer distribution, but did not specify which he was eyeing. The company already has nine plants in Russia, but its presence in the east is weak.

Sun Interbrew, late to catch on to the demand for cheap plastic bottled beer in Russia, went on a drive to improve market share late last year. It has raised its market share to 14.4 % from 11.7 % last year.

Interbrew's CEO John Brock said after the Belgian company's results were announced on Tuesday: "We recovered what we lost (in Russia). July and August were even better than the first half of the year..."I'd be very surprised if we don't gain additional market share between now and the end of the year."

Strella has said Interbrew originally rejected the idea that plastic was a respectable packaging for its beer, but under his helm the company launched new bottling lines to fill plastic bottles developed specially by Interbrew.Strella said Sun Interbrew, now Russia's second biggest brewer by sales, was targeting 20 % market share in Russia by 2005. In Ukraine, where it has three factories, it leads with a 34 per cent market share.

Sun Interbrew saw market share and volume gains in the first half despite a depressed beer market and a cold summer.
"The one question no one can ask is, was it the weather (that boosted the Russia business)," Strella told investors at the presentation. "This is the worst weather since 1953." He said the Russian market would grow 4-5 percent this year. Sun Interbrew's Russia volumes should increase to about 70 million hectolitres from 67 million in 2002, and to about 16 million in Ukraine from 13.5 million last year.

The company will sell its three-year bonds on September 18 to refinance short term obligations, finance capital expenditure and partially pay for a previously agreed brewery purchase in the central Volga region. The bonds have an 11-month put option. The underwriters, Raiffeisen, forecast a 13-14 per cent yield on the bond. Sun Interbrew is due to report its second-quarter results on September 30. Strella said costs as a percentage of net sales were down year-on-year owing to reduced advertising costs.


12 September, 2003