By the end of 2005, beer consumption in Byelorussia could be up from a projected 23.7 liters per person in 2003 to 51 liters. That means that if now every Byelorussian drinks one standard beer bottle (0.33 liter) every five days, then in 2005 he (or she) will consume one bottle every two and a half days. Until this year, beer production had fallen every year since 1999. By international standards, the Belarusian beer market is small beer. Spirits, and vodka in particular, are the drinks of choice, beer the dregs. But those who run this centrally controlled economy are determined that things should change.

By 2005, the aim of Byelorussian government is for imports to account for only 5.5 % of the beer sold in the country. After further regulations imposed this April and June, it has become nearly impossible to import beer, particularly for smaller breweries. The price of a license for a consignment is now $10,700 (paid in advance), the size of the minimum consignment has increased, and a new excise tax has been introduced. And those were just a few of the restrictions. Unsurprisingly, the flow of Russian beer has slowed. Baltika has even gone off-tap. The price of Russian beer sold in Belarus has rocketed up 30%. The differential is likely to widen. New limitations are expected in 2004, with a new tax on beer equivalent to 2 % of the cost of domestic beer, and 10 % for imported beer.

The same logic underlies the government’s attempt to increase domestic production of barley. It is a tough task. In 2002, brewers bought only 33,200 tons of Belarusian (relatively low-quality) barley with the other 95,000 tons coming from abroad (principally Denmark and France). This year, 110,000 to 112,000 tons should be bought domestically, it recommended.

The net result, the government hopes, should be an increase in tax revenues from $20 million in 2002 to $80 million in 2005. (How realistic this figure is another matter. A market of sorts operates; the prices of beer and barley have been set free, and breweries are no longer forced to buy barley from state-owned suppliers.)

The problem with all this, though, is that this also requires a doubling of beer production and, since roughly 70 % of Belarusian breweries’ equipment has already been fully depreciated, that requires large sums of capital.

The government’s own estimate of the cost of restructuring Belarusian breweries is $111.5 million. It has asked six domestic banks to give breweries credits totalling $74.8 million, and given one bank, Priorbank, the task of restructuring four breweries (including Krynitsa).

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .