Not five but one
SABMiller has agreed to acquire the country´s number four brewer CJSC Sarmat for an undisclosed sum. Sarmat which is controlled by one of eastern Ukraine´s Russia-leaning oligarchs is said to be worth some USD 130 million. Before the sale the Sarmat group of breweries operated in five regions of the Ukraine. However, SABMiller will buy only the Donetsk brewery.
Sometimes you got no choice but to do business with people whose reputation is not exactly pristine white. In order to enter one of Europe´s fastest growing beer markets, SABMiller had to do business with the Ukraine´s richest oligarch, Rinat Akhmetov. Mr Akhmetov, who once ran a mafia-style protection money racket, is the godfather of the Donetsk clan of oligarchs, whose political inclinations tend to go towards Russia. Today the 42-year-old Akhmetov controls assets in steel, coal, energy, banking, hotels, telecoms, television and brewing, with the Donetsk football club thrown in for good measure.
Although Mr Akhmetov is said not to enjoy alcohol, he still gobbled up breweries, softdrink plants and maltings in several parts of the Ukraine, including the Crimea. Still his venture was not crowned with success. The Sarmat group of breweries has seen its market share dwindle over the years. In 2007 it was 7 percent, down from 12.4 percent in 2005. This decline is even more remarkable as beer consumption in the Ukraine has gone up steadily.
In 2006 an average Ukrainian drank 45 litres to 50 litres of beer and industry experts argue that this was not sufficient to satisfy their needs. Russians drink 60 litres of beer annually while in the more mature European markets consumers knock back some 70 litres per year.
According to Ukrpyvo association, beer consumption in Ukraine in 2006 increased 12.4 percent to 26.7 million hl. About 95 percent of this was produced by four largest companies: Obolon (34.8%), Sun Interbrew Ukraine (34.7%), Baltic Beverages Holding (15.8%) and Sarmat CJSC.
With Sarmat losing business to its competitors Mr Akhmetov lost interest and decided to put the group on the market. However, SABMiller only wanted to buy the Donetsk brewery, which has an annual production capacity of 2.9 million hl says SABMiller. Which leaves Mr Akhmetov stranded with the rest. Who will take these breweries off his hands now?
