Bulgaria: Beer market has fair chances to grow steadily

Brewers in the country currently produce seven beers under international licences – Amstel, Heineken, Murphy’s, Stella Artois, Beck’s, Staropramen and Tuborg – and two more are expected to enter the market by the end of the year, Vladimir Ivanov, chairman of the Union of Brewers in Bulgaria (UBB) told The Sofia Echo July 31.

Sales in stores account for 65 per cent of the market, but investments in branding and packaging are pushing social drinking upwards.

The segment of polyethylene terephthalate (PET) packaging accounts for 37 per cent of the total sales, but it is judged to have reached about its maximum capacity.

Average beer prices vary from 0.55 leva (0.35 euro) for a half-litre bottle of lager beer to 0.80 leva for licensed beers.

“Beer prices are not likely to move up significantly after Bulgaria joins the EU in order to keep consumption up,” said Ivanov.

The beer market of the country has been growing only slowly over the last decade due to the low purchasing power of the population.

In 2004 beer consumption reached its level of 1991, or about 4.7 million hectolitres, far from the seven million hectolitres consumed in 1990, the first year after the fall of communism in Bulgaria.

Bulgarians consumed 61 litres of beer per capita last year.

“The Bulgarian market has fair chances to grow steadily,” said Ivanov.

Bulgarian brewers have invested over 400 million leva in their industry since 1994 and investments for the first half of 2006 alone stood at 38 million leva, said Ivanov.

Brewers invested a total of 73.13 million leva in technical equipment, marketing and advertising, and human resources development in 2005, up from 45.2 million leva in 2004.

The sector employs 2400 brewery workers with about 12 000 people involved in distribution.

There is hardly any exporting of Bulgarian brands because beer drinkers are strongly conservative and it is hard to impose a brand from a country not considered a beer nation like Germany or the Czech Republic, said Ivanov.

InBev’s Kamenitza, which currently leads domestic sales, has a few exports to neighbouring Macedonia, as well as to the US and Denmark, which is aimed at the Bulgarian diaspora in those countries, Johan De Smet-Van Damme, Kamenitza CEO, told reporters. “We do not have an export policy,” he added.

The major players in the Bulgarian market are international companies and exports from Bulgaria could be competitive to the firms’ brands in other countries, De Smet-Van Damme said.

Heineken’s Zagorka general manager Jan Derck van Karnebeek said that the company had to catch up with the rising domestic consumption before thinking of exports, but forecast that cheap prices in Bulgaria would spur exports after the country joins the EU.

“Even if we do not focus on exports, various retailers will likely launch exports of Bulgarian-made beers to their European outlets, taking advantage of low prices,” Gruncharov said.

Bulgaria consumes an average 120 000 tons of barley and 450 tons of hops.

“There is no good selection of barley in Bulgaria and that is why most producers import barley to secure good quality of their beer,” said Ivanov.

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