Russia: Heineken N/V could acquire Russia’s mid-sized brewery Patra

Dutch beer giant, Heineken N/V is in talks with Alfa-Eco Group to acquire Russian brewery OAO Patra, business media Kommersant reported on April 29, saying the parties have signed an intentions agreement. Should the deal succeed, Heineken will own a fourth brewer in Russia and will become the leader in the beer market of Ural region. As for Alfa, it will sell its last beer asset in Russia.

A Heineken spokeswoman had no comment on the report but said the brewer's ambition to expand in Russia was well known, according to Reuters. The Dutch brewer said earlier it was aiming to boost its market share in Russia to between 15 and 20 % from its current 9 %.

Ekaterinburg-based OAO Patra has a total capacity of 1.2 million hl and controls about 0.6 % of the Russian beer market and 20% of Ural region beer market. In Ural Baltika has 17% and Sun Interbrew 5%. In 2004 Patra brewed 0.7 million hl of beer. The main brands are: Patra, Knyaje etc. Patra brewery’s turnover is about US$ 30 million.

In May 2004 Alfa-Eco purchased a controlling interest of Patra. In January 2005, in a deal with SUN Interbrew, Alfa-Eco became the owner of other 23% of Patra. Now Alfa controls more than 90% of the brewery.

"We estimate that Heineken will pay $50-60 million for the plant," brokerage UralSib analyst Marat Ibragimov said in a note. "The acquisition is another important step in Heineken obtaining a dominant (position) in Russia's beer market," he added.

Heineken NV, the world's fourth-largest brewer in terms of sales, owns the Bochkaryev brand and controls West Siberia's Sobol Beer brewery, Central European Brewing Company and Volga Brewery.

Heineken plans to brew and distribute Guinness stout in Russia with drinks giant Diageo as it seeks to tap the fast-growing international licensed brand segment of the Russian beer market.

The market leader in Russia is Baltic Beverages Holding, a joint venture of Scottish & Newcastle Plc and Denmark's Carlsberg.

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