E-Malt.com News article: Romania: Brewers cut down on advertisement expenditures amid financial crisis

Romanian beer producers' promotional investments were three times lower in September against the same period in 2007, Alfa Cont research firm data was cited by Ziarul Financiar on October, 24.

"The first step a company makes when uncertainties occur is to put a brake on ad budgets, which is exactly what brewers did in September amid worries related to the international financial crisis," stated Shachar Shaine, chairman of Romania's Brewers Association, which includes Heineken Romania, InBev Romania, United Romanian Breweries Bereprod and Ursus Breweries.

In the first nine months of this year, investments operated by the domestic subsidiaries of beer multinationals were 17% lower than a year ago, from above 194 million euros in 2007 to a little below 155 million euros in late September, according to Alfa Cont.

The biggest slump in ad investments was felt in September, when brewers paid 9.9 million euros (rate-card); three times less than the over 26 million euros spent in the same period of 2007.

Another factor that could have triggered these budget cuts is brewers' having started to direct ad investments to 3-4 brands at the most, which differs from previous years, when they used to invest in the promotion of at least half of the brands in the portfolio.

"Also, producers are starting to look at alternative media channels, such as the Internet or events, which have developed a lot recently and are not monitored by research companies," Shaine said.

The top three players on the market, namely Ursus Breweries, Heineken Romania and InBev Romania, conducted almost 80% of ad investments registered in the first nine months whilst Ursus Breweries was the only one of the three that boosted its promotional budget during this period.

Brewers posted slower growth in terms of sold volumes, as well. After the beer market registered consumption of 89 litres per capita at the end of last year, the growth rate slowed down in 2008, whilst brewers posted sales of 9.9 million hectolitres in the first six months, just 5% higher than in the similar period of 2007.

For the end of this year, brewers expect the sales threshold of 20 million hectolitres to be exceeded and consumption to reach 95 litres per capita, in the context where the growth rate brewers anticipate for the end of 2008 ranges between 6% and 8%.


24 October, 2008