E-Malt.com News article: 2647

Russia, St Petersburg: Baltic Beverages Holdings, Scottish & Newcastle’s half-owned brewery that is Russia’s beer market leader, has struck an aggressive posture on further market share growth.

Leading BBH executives indicated they believed they could take its market share from the current 32.6 per cent to between 35 and 50 per cent through a mixture of acquisitions and organic growth. Christian Ramm-Schmidt, president of BBH, whose other parent company is Denmark’s Carlsberg, said he continued to believe "we would like to be the Anheuser Busch of Russia". Anheuser Busch has about 50 per cent of the US market. Ramm-Schmidt said: "I’m not happy for our market share to remain where it is now. "There is definitely room for growth, although this has to be balanced between market share and profits."

S&N paid £1.2 billion for Hartwall, Finland’s largest brewer, in February 2002 and picked up the 50 per cent share in BBH in the process.

Anton Artemiev, executive vice president of BBH, about three-quarters of whose sales are in Russia, said: "The regulators in Russia have shown they are comfortable with a beer market share of 35 per cent. But although gains will then come under greater scrutiny, we know the regulators will allow more if you show you are not playing around on price."

It is believed BBH, whose profits have increased on a pro-forma basis, to 264 million last year from 9m in 1994, has been stung by recent quarterly trading results to end-March 2004 showing its market share fell from 33 to 32.6 per cent due to a "marked increase in channel-stocking by distributors."

It is understood the main rival stepping up its deliveries to such wholesalers, sometimes on very extended credit limits, is Sun Interbrew.

Ramm-Schmidt said he believed it was important to push forward market share because it would be more costly for competitors to enter and gain share later on.

"I don’t need more breweries. We have ten breweries in Russia already at present. We can grow organically, however," he said.

He added "You don’t have to have a very big cash box in Russia unless you are late (into the market)."

Ramm-Schmidt added: that he believed a continued key strategy of BBH in trying to boost market share would be "allying western know-how to release the entrepreneurial spirit of the local people."


14 May, 2004