Serbia and Montenegro: The Kosovo Trust Agency has launched privatisation of Peja Brewery

The Kosovo Trust Agency announced on October 7 it has launched the privatisation of Peja Brewery (N.P. Fabrika e Birrës), a socially owned enterprise, which is considered to be one of the most important enterprises to be privatised.

Prequalification dates for both entities are January 11, 2006, with the first round of bids dues by January 18, 2006.

The new company, NewCo Peja Brewery L.L.C. will only include the assets that constitute Peja Brewery’s beer production and commercialisation activity, namely a major part of its main production site in Pejë/Peć. It does not include a number of Peja Brewery assets that are considered to be “non-core”. Special Spin-off conditions apply to NewCo’s tender.

Peja Brewery is the major beer producer in Kosovo, producing approximately 193,000 hectoliters of beer in 2004. Peja Brewery’s main product is a light, full-flavoured, Pilsner-type beer, which is branded “Birrë e Pejës”. It is sold in glass bottle (0.5 litre and 0.33 litre) and in keg (50 litres). “Birrë e Pejës” is the leading beer in Kosovo, where it enjoys strong brand recognition. The company also produces malt (the main raw material in beer) from barley, for its own use and for third-party sales. Other revenue is derived from sales of barley and by-products from beer.

At present, Peja Brewery’s market is essentially Kosovo. The Kosovo market presents significant growth potential, as it is seen as “immature” in terms of per capita consumption (particularly, when compared to other Balkan and Eastern European markets). In recent years, it has grown rapidly, as have the company’s sales. 2004 reported sales amounted to c. €11.2 million. Around 90% of the company’s sales are done through a myriad of small private distributors, only some retail outlets being supplied directly.

Management believes that there is significant potential for exports in countries with large ethnic-Albanian populations.

Peja Brewery is the only significant brewery in Kosovo and the clear market leader. There are only two other much smaller local breweries, but competition from them is very limited. Besides “Birrë e Pejës”, imported brands produced by major beer companies in neighbouring regions are widely available and in general more expensive.

The enterprise currently employs about 506 staff.

NewCo Peja Brewery L.L.C. is located on a site of c.18 hectares, with easy access from the main road. There is ample space for further site development (total built-on area is c.3.8 hectares). Buildings housing the company’s production, packaging and warehousing activities are situated close together.

NewCo Peja Brewery L.L.C. includes the plant and all equipment needed to produce 325,000 hectolitres of beer and 17,600 tons of malt per year. Besides, equipment comprises an unfinished brew-house with much higher beer production capacity - this could eventually be completed. The company enjoys a secure supply of raw materials and benefits from a plentiful supply of clean water.

Only limited working capital liabilities relating to Peja Beer’s core business will be transferred to NewCo.

For more information see www.kta-kosovo.org

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