Russia: Heineken to focus on Russian market as China is "not an easy nut to crack"

Dutch brewer Heineken NV’s chief executive said in a newspaper interview on Monday, March 13 the brewery would concentrate on expanding on Russian beer market, after struggling to grow in the Chinese market, according to Reuters.

Jean-Francois van Boxmeer told Het Financieele Dagblad that China -- the world's fastest-growing market for beer and accounting for 16 % of global consumption -- was "not an easy nut to crack".

In particular the higher cost of Heineken beer and its bitter flavour to Chinese tastes posed problems, Van Boxmeer said. "The price difference between premium and standard beer is much wider there than the 40% seen elsewhere. We can't let the price drop too much, otherwise it becomes attractive for people to export locally produced Heineken to Australia and Japan," Van Boxmeer said.

"We can't let the price drop too much, otherwise it becomes attractive for people to export locally produced Heineken to Australia and Japan."

Heineken is the world's fourth-largest brewer in terms of sales.

Russia's beer market is also growing fast, however, and Heineken has expanded its position with a string of buys, gaining it a 14 percent market share, he said. Heineken had sufficient scale and beer brands to play a leading role in further consolidation, he added.

Last month the brewer of brands such as Amstel, Tiger and Murphys posted a better-than-expected rise in 2005 profits and said it would save 200 million euros ($238 million) a year by 2008, driving its shares to their highest level since 2003.

The company bought five breweries in Russia last year and is buying a sixth. Recently Heineken also agreed to brew, sell and distribute Budweiser in the country on behalf of Anheuser-Busch.

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