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14 Apr, 2008 03:34

Inflation bites Russian beer drinkers

Beer drinkers in Russia are likely to be slugged with extra costs, as producers look to pass on a 40% jump in costs. Only the U.S. and China consume more beer than Russia.

But this year growth is expected to dive to single digits. Spiralling costs are hurting the industry, which claims 40% of the country’s aluminum cans; 60% of glass bottles and 80% of its malt.

The producer of Grolsch and Carling admits that will be passed on.

“We have got high inflation in Russia, that has driven by a number of factors and all brewers face that, so yes, we will look at our prices and charge appropriate prices in the market place,” confessed SABMiller Rus CEO James Wilson.

Baltika brewery, which controls 37% of the Russian market, claims that last year competition was so heavy double-digit retail price rises are not an option.

Extra profits will be created by moving into so-called “premiumisation”.

“Our strategy will be to increase the average price of our litre through more premiumisation of our portfolio,” stressed the president of Baltika, Anton Artemyev.

Despite falling national growth, the world’s biggest brewer InBev revealed it was hunting for the best region in Russia for a new factory.

“We will probably build greenfields, we are not in an acquisition mode. If a given pocket in Russia starts to expand faster, we would then look at putting a greenfield in there,” stated Sun Inbev Russia’s Chairman Joseph W. Strella.

Russian brands have held an 88% share against foreign beer, and the next step is international expansion. Baltika told RT a deal for it to be produced in a new Eurasian state would be announced within a month.