Russian Georgian war impacts brewer Efes
Obviously, Turkish Efes does not have to takes sides in the conflict. Yet shareholders fear that the brewer will lose business as a result of tensions in the Caucasus. Shares of Anadolu Efes fell the most in more than a year in Istanbul trading on 27 August. Anadolu Efes’ shares plunged 1.40 liras, or 11 percent, to 11.50 liras, the biggest drop since June 2006.
Russia is Efes’ major foreign beer market. 78 percent of Efes Brewing International’s beer volume were sold in Russia during the first half of 2008. In Russia Efes Brewing International (EBI) enjoys a 9 percent market share. Moreover, EBI entered the Georgian beer market in February this year through the acquisition of leading brewer Lomisi. According to EBI, the Georgian brewer generated 300,000 hl volume sales between March and June. That’s 3.9 percent of EBI’s sales in the first half of 2008. When it comes to EBITDA, Lomisi fares even better: it contributed 6.5 percent to EBI’s profits.
Following the outbreak of war in August, Turkish businesses worry that trade with both countries will be hurt. Turkey has deep and strong economic ties to Russia and Georgia. Although Georgia is by far the smaller trade partner, there are nearly 100 firms currently operating there, the aggregate investment of these firms having reached USD 600 million this year. A further USD 400 million of Turkey’s exports to Azerbaijan go through Georgia via road transport, it was reported.
On the other hand, Russia is Turkey’s biggest trade partner with USD 28 billion of trade volume last year, with Turkey’s natural gas imports from Russia totalling USD 18 billion, media reports say. Already in the first four months of this year, the aggregate trade volume between the two countries has reached USD 12.75 billion.
The international community has condemned Russia’s campaign in Georgia and its subsequent recognition of Georgian breakaway regions South Ossetia and Abkhazia as independent states. While Turkey has refrained from strong condemnations of Russia, it has nevertheless curbed Russian imports as of 1 September. Goods entering Turkey from Russia are subject to additional physical searches. Russian goods will be forced to wait at the border. This is Turkey’s response to Russian action. Turkish exporters have been hit by delays at Russian border crossings since NATO-member Turkey allowed two U.S. ships to transit the Bosphorus Strait to provide aid to Georgia.
