Russia: Dutch brewer Heineken and drinks giant Diageo announced on Thursday, January 20, that they will commence a partnership for the production and distribution of Guinness in Russia. Heineken Brewery LLC will become the authorised importer and distributor of Guinness and Kilkenny brands in Russia from July 1, 2005 the company said in a statement.

Heineken NV, the world's fourth largest brewer in terms of sales, said it will start local production of Guinness Foreign Extra Stout under license in St Petersburg before July 2005. The deal opens up lucrative revenue streams for Heineken and Diageo as they tap into the fast-growing international licensed brand segment of the Russian beer market.

The companies did not reveal the financial terms of the deal.

Mr. Roland Pirmez, CEO Heineken Russia, commented: "Heineken becomes the first one to start brewing the real stout proposition brand on the Russian beer market. The consumer will be glad to notice decrease in retail price for locally produced Guinness Foreign Extra Stout. It is expected to be on the same level as for other brands in the international licensed beer segment".

Guinness Foreign Extra Stout will be produced and sold in 0.5 liter cans and 0.5 liter bottles. It will be brewed according to the old Irish recipe and technology standards, using only natural ingredients in the brewing process. Draught Guinness will continue to be imported from Guinness Ireland for marketing, sales and distribution in the on-trade.

Ms Alison Forrestal, General Manager Diageo Russia, commented: "The existing distribution network of Heineken Russia and its specialized beer marketing and sales expertise in Russia will accelerate growth of Guinness brand in the fastest growing sector of the Russian beer market - the international licensed brand segment."

Heineken NV bought Bravo International LLC in St Petersburg in 2002 (Heineken Brewery LLC from 01.03.2003). At the moment Heineken Russia embodies a group of 4 non listed companies located in different parts of the Russian Federation: Heineken Brewery LLC in St Petersburg with brand portfolio consisting of locally produced Heineken, national brands Bochkarev, Ohota, licensed Bavarian Lowenbrau, Buckler and imported Amstel and Murphy's; Volga brewery in Nizhny Novgorod with key regional brands Rusich, Okskoye and Volga; Shikhan brewery in Sterlitamak (Bashkortostan) with popular local brands Shikhan, Solyanaya Pristan and Sedoy Ural; and Sobol Beer in Novosibirsk famous for Sobol brand. The acquisitions provided the company with market share of 8.6% in Russia and strengthened its position No.3 on the Russian beer market. Heineken Russia is an employer of over 4000 people.

Diageo is the world's leading premium drinks business. With its global vision, and local marketing focus, Diageo brings to consumers an outstanding collection of beverage alcohol brands across the spirits, wine and beer categories including Smirnoff, Guinness, Johnnie Walker, Baileys, J&B, Jose Cuervo, Captain Morgan and Tanqueray, and Beaulieu Vineyard and Sterling Vineyards wines. Diageo trades in some 180 countries around the world and is listed on both the New York Stock Exchange (DEO) and the London Stock Exchange (DGE).

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