Russia, Moscow: Brewer and restaurants firm Tinkoff may be Russia's only beer maker to welcome a law on restricting public beer consumption in a country where about a third of the amber liquid is drunk in the street, Reuters revealed on Friday, January 14.

In 2004, parliament passed a bill forbidding beer sales on public transport and in cultural and sports buildings as well as near schools. It also bans beer drinking on the street and in stadiums, parks, public transport and by people under age. But President Vladimir Putin vetoed the bill and asked legislators to rewrite the part outlining local governments' authority to designate areas where beer could not be consumed.

"These limitations are only a plus for Tinkoff," Alexei Semyonov, corporate finance director for Russia's only company to produce ultrapremium beer, told Reuters. Tinkoff is considering an offering of shares to the public next year. "Our brand is expensive, you would not drink it from a bottle walking in the street. When the bill becomes law, people would go to our beer restaurants more and, logically, will drink more beer of the same name."

Tinkoff currently owns eight restaurants and plans to open four more this year.

The proposed law follows new advertising rules that made Russian beer advertising one of the most strictly legislated in the world. The legislative initiatives caused much anger among beer producers, who are dominated by foreign companies. However, Alexei Krivoshapko, a consumer industry analyst at investment bank UFG said he thought Tinkoff's optimism was not well-founded because the change in legislation would not put more money in Russians' pockets to spend in the company's restaurants.

Many Russians find eating in restaurants is beyond their means.

But Tinkoff, which plans to boost 2005 beer sales to about 620,000 hectoliters from 170,000 hectoliters last year, understands it cannot win the market with only expensive beer. Semyonov said Tinkoff, which produces beer of the same name, would in May this year launch a new brewery with a capacity of 2 million hectoliters a year and a possibility to produce 4 million hectoliters. The new brewery will mainly produce a new, cheaper beer called "T," which will contribute 300,000 to 400,000 hectoliters to this year's production and US$15 million to US$20 million in revenue.

"All international giants are based on medium or low segment beer brands," Semyonov says. A liter of new beer will cost around 60 roubles (US$2.15) compared with around 100 roubles per one liter of Tinkoff. Tinkoff plans to issue 1 billion roubles' worth of bonds this spring to finance the promotion of the new brand and to refinance a 400 million rouble bond which also matures in spring, Semyonov said.

The company is also considering selling a stake to a strategic investor and carrying out an initial public offering in 2006 at the earliest to develop its business. "We are in talks with different companies," Semyonov said. "We are interested in the quick development of our business and getting a partner is one of the variants of doing so."

Semyonov said Tinkoff's IPO would take place once its revenue reaches US$200 million, compared with last year's US$53 million-US$55 million. He declined to give a forecast for annual sales this year.

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