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Russia beer market: Baltika the leading player during 2012
Beer in Russia - a new market research report on 2014-03-31 06:28:07
Baltika remained as leader in the Russia beer market, holding 36% volume share in 2012. It is the largest fast moving consumer goods production company in Russia, with production facilities in eleven cities across the country and one abroad. The company has a wide portfolio of products, which allows it to remain a key player in beer. Its most well-known and popular brand remains the core Baltika brand, although it also produces 30 further beer brands, including Arsenalnoe, Nevskoe, Yarpivo, Tuborg, and Carlsberg, as well as 11 non-beer brands. In August 2012, it was announced that Danish brewer, Carlsberg, had purchased the remaining 15% of Baltika stock from minority shareholders in a voluntary offer, which increased its stake in the brewery from 85% to just under 97%.

In November 2012, Carlsberg then acquired the remaining shares in a compulsory offer procedure, fully integrating Baltika into the Carlsberg Group. This move was undertaken as Carlsberg suffered declining sales in Russia mid-review period, and it was thought that the company would benefit if its operations were no longer subject to approval from independent Baltika directors. Given projected declines in beer however, some analysts have considered this a risky endeavour.

As part of the government´s efforts to clamp down on the overconsumption of alcohol in Russia, beer was reclassified from a foodstuff to alcohol on 1 July 2012. This came about as beer consumption was identified as one of the main problems contributing to Russia´s excessive drinking culture. The reclassification made beer subject to new alcohol trading restrictions, which also came into force 1 January 2013. As part of this, a nationwide ban on selling beer from street stands was imposed, and the sale of beer was also prohibited in areas around children´s playgrounds, educational institutions, sports facilities and public transport stations. The government also announced a period of progressive tax increases between 2012 and 2015, with excise duty on beers with alcohol content less than 8.6% subject to an increase from RUB12 per litre in 2012 to RUB15 in 2013; while beer with an alcohol content of over 8.6% will see duty increasing to RUB26 per litre in 2013.

Beer in Russia is predicted to register a volume CAGR of -1% over the forecast period, as progressive governmental excise duty hikes will lead to considerable price increases over the first half of the forecast period. In addition, many of the measures that came into force at the start of 2013 will have a notable effect on beer, including the reclassification of beer as an alcoholic beverage, restricted sales hours in off-trade and the ban on selling beer from street stalls/kiosks, which have typically fed into the Russian culture of drinking on-the-go.

Another influence may prove to be the proposed ban on PET packaging for alcoholic beverages, which will further reduce the affordability and selection of cheaper beer. Indeed in the case of some regional brands, their entire offering is produced in PET packaging, which would either necessitate their removal altogether, or marked price rises as producers are forced to upgrade to smaller glass bottles.

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