The Czech Republic & Russia: Czech brewers see exports to Russia fall due to the financial crisis

A Russian fashion for imported beers meant a boon for Czech breweries a few years back. However, the economic crisis of the last two years and restrictions on marketing have led to a marked fall in exports of Czech lager to the world’s biggest country, the daily Hospodářské noviny reported.

In 2014, 10.2 percent of Czech beer exports went to Russia, making it the third biggest export market for brewers in this part of the world. Last year that share fell to 5.5 percent, with the Russians placing fifth among importers.

The fall in the price of oil and international sanctions caused the collapse of the rouble in the second half of 2014.

The financial crisis that has followed has forced Russians to tighten their belts and many beer drinkers have switched to cheaper, locally produced brands.

A representative of Budějovický Budvar, Jiří Pekhart, told Hospodářské noviny that its sales in Russia had fallen by almost half last year. Fellow Czech brewer Bernard reported a similar situation.

The three biggest Czech firms on the market, Plzeňský Prazdroj, Staropramen and Krušovice, all of which have brewing facilities in the country, have also seen declines.

Indeed, data from the Czech Statistics Office and the customs authority shows that Czech exports to Russia fell by over a third in volume and even more in value in 2015.

The downturn is expected to continue this year, Hospodářské noviny said.

Czech lagers such as Pilsner Urquell and Krušovice have been sold as premium products in Russia and have always been more expensive than local brews.

However, that gap has widened thanks to the weakness of the rouble. Bottled Czech imports are now up to 10 times more expensive than Russian bottled beers, Jiří Pekhart of Budějovický Budvar said.

The Czech brands with breweries in Russia see increasing local production as their best shot at remaining competitive. Budvar is also offering pubs smaller barrels in reaction to the fall in consumption.

However, the rouble’s problems aren’t the only reason Czech breweries are seeing their sales take a nosedive.

Last year President Vladimir Putin accused breweries of being to blame for alcoholism. This in a country which did not even classify beer as alcohol until 2010.

A ban was introduced on selling beer at street kiosks or after 10 PM. There is now talk of outlawing the sale of beer in plastic battles.

On top of this a ban on all advertisements for the amber nectar has been imposed, Hospodářské noviny said.

Some companies have sought to get around the advertising ban. Krušovice, for instance, has begun sponsoring ice hockey, a sport popular with Russians.

19 February, 2016