Russia: Easern Europe is the only attractive part of S&N beer business
Scottish&Newcastle shareholders will hold Company’s annual meeting in Edinburgh on Thursday, April 28 and will cheer once again on news that, where growth in beer sales is sluggish throughout Western Europe, in Russia, the Ukraine, the Baltic states and Kazakhstan the trend remains sharply upward. Leading the charge is BBH, the S&N joint venture with Carlsberg, described by one City analyst as "the only sexy part of their beer business".
Baltic Beverages Holdings holds three of the top six brands in Russia, amounting to 34 % of total market share (see chart). Since its foundation in 1991, the Baltika brand has intertwined itself with Russia's newly prosperous lifestyle.
The fifth-largest beer market in the world, Russia has 380 breweries, producing 6.58 billion litres of beer in 2004, compared to 5.87 the previous year. Even if the red flush of the 90s beer binge has faded - the 20 per cent growth rates of the mid-90s are things of the past - the market is far from mature.
Nevertheless S&N's spokesperson Linda Bain expects 2005 to show 7 or 8 % growth for BBH, down from 13% last year but still outperforming the rest of the Russian beer market. No wonder the company talks of "our objective for Baltika to challenge Heineken as the No.1 brand in Europe".
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