A BRIC short of a wall
The current economic crisis has brought to an end the consumer boom in Russia and will lead to almost zero real disposable income growth in the near future, as companies are laying off people and reducing salaries.
Brewers were among the first to feel the effect: lower purchasing power, as a result of the crisis, contributed to the drop in beer output. Unfavourable weather conditions during the summer also had a negative influence.
Analysts warily forecast that the Russian economy may begin to recover in the second half of 2009 – provided a global turnaround takes off.
Brewers appear to be more bullish while financial analysts tend to be more bearish. Alexei Voinov, Ochakovo’s Marketing Director, reportedly said that the Russian beer market will grow 1 percent to 2 percent in 2009. This view was shared by Efes Breweries. Although the Turkish brewer is expecting negative market dynamics in the first four months of 2009, the general forecast for the year is positive.
In any case, the weather will be one of the most important factors whether the Russian beer market will recover this year or not.
Yet even if beer output were to recover this year, the increase will not readily translate into increased profits. In value terms, Russia’s beer market will shrink this year, analysts forecast. For several years, the market has seen a transition in consumer demand from cheap beverages to more expensive ones.
This year, however, brewers may witness a reverse trend on the back of falling incomes. In 2008, consumers already began to buy more beer in PET bottles (which embraces mainly low cost beer). Sales of beer in PET increased 10 percent last year, whereas before they had been declining steadily, it was reported.
Efes says that in Russia in 2008 its sales volume reached 11.1 million hl by
growing 6.8 percent year-on-year. According to figures by ACNielsen (September 2008), Baltic Beverages Holding controlled the market with a share of 39.2 percent, followed by InBev (18.4%), Heineken (15.4%), Efes (9.2%), SABMiller (6.7%) and Ochakovo (3.3%).
