Concerns over Baltika losing market share
Rising expenses for commodities including malt and barley may lead to higher prices and “significantly lower” earnings in eastern Europe, where operating profit increased 27 percent in the third quarter, Carlsberg said. The region accounts for 31 percent of the brewer’s revenue and more than half of its profits.
Carlsberg said it lost market share in Russia, where its subsidiary Baltika is the biggest brewer. Its market share for the nine months 2010 was 38.9 percent, which translates into an 80 basis points decline over the same period in 2009. Carlsberg pointed out that it increased prices – 25 percent at one go – while its competitors did some heavy promotions and only raised prices after a certain time gap.
AB-InBev reported that in its third quarter beer sales in Russia were 8 percent higher than in the same period last year.
Carlsberg thinks that in Russia there is still a strong potential for beer market growth if beer manages to take “share of throat” away from vodka.
Incidentally, there is no exact data on vodka consumption. A large portion of vodka consumption is still uncontrolled.
Anton Artemiev, chief of Baltika, said: “What we know for now is that the official vodka market has gone down by around 6 percent. We assume or we estimate that the unofficial market has also gone down somewhat.”
Vodka is accounting for 70 percent of the total alcohol intake with beer and wines accounting for 30 percent.
As concerns the minimum price for vodka, Mr Artemiev said that it’s at 89 rubles (EUR 2.1) per half litre bottle at the moment. There has been discussion to increase it further. Numbers range from 110 rubles (EUR 2.60) to sometimes 200 rubles (EUR 4.75) and more per half litre bottle.
What will be the exact result of the discussion and the decision by the Russian government, Carlsberg refused to speculate on. But Mr Artemiev believes that changes in the minimum price of vodka are likely, because all the discussions are about increasing that minimum price.
