A double blow: beer consumption down and excise up

Reporting Carlsberg’s half year results (ended 30 June 2009) on 5 August 2009, CEO Jørgen Buhl Rasmussen admitted that the market decline in Russia was more than expected. Hence Carlsberg has been forced to assume a 5-6 percent decline for the year (previously assuming a 2 percent decline).

In the first half of 2009 Baltika’s beer shipments declined 8 percent.

Still, Baltika managed to deliver strong gross and operating margin

improvements thanks to favourable input costs, synergies and efficiency improvements, Mr Rasmussen said.

For Baltika there was a negative mix effect of around 3 percent in the first six

months. This was driven by the packaging mix as consumers continue to

buy the same brands but move from glass bottles to PET, Carlsberg claimed.

Commenting on the rumour that the Russian Ministry of Finance was considering a tripling of the excise on beer, Anton Artemiev, Baltika’s chief, said that the Minister of Finance would now be looking for some sources to fill the state budget deficit. He added that this would take time. The proposal should go to the Duma (Russia’s parliament) and it remains to be seen what the final proposal is. The Duma will discuss it presumably in September; maybe even later.

In the past, Mr Artemiev explained, there have been different proposals each year and never has the most extreme proposal gone through.

But there is always a first time, especially if you consider that a bottle of beer in Russia is still cheaper than a bottle of Coke.