Agreement with Armavir Factory will allow Baltika to continue improving logistics system

may 22, 2007

Today OJSC Baltika Breweries and JSC Armavir Factory of Heavy Mechanical Engineering signed an agreement to deliver 100 railway cars.

By late May 2007 100 Armavir-made train cars will arrive to Baltika Breweries in St. Petersburg. Expansion of railway car park of the company is a part of the project to improve business processes and create the best delivery chain in the sector.

The railway serves as one of the main means of transporting Baltika products on averages and long distances. In 2006, the volume of deliveries in company’s own covered cars amounted to more than 29,000 units, excluding packaging and way cargoes.

The railway park of the company at present totals 1,500 universal covered cars, making Baltika second largest train car owner in Russia after JSC RZHD.

Successfully developing and improving its own system of logistics, Baltika Breweries makes a real contribution to development of related economy sectors. As a result of cooperation between Baltika and Armavir Factory of Heavy Mechanical Engineering regional economy receives considerable investments. The market price of one universal covered train car today amounts to some € 60-70 thousand.

Alexey Skatin, Logistics Director at OJSC Baltika Breweries: Last fall Baltika Breweries began work on improving business processes and creating the best logistics system in the branch, which is expected to span several years, and includes large scale reorganization of management in logistics unification of logistics structures at 9 breweries of the company, and starting the project on management of our own railway park. Our purpose is to be able to deliver high-quality fresh beer to any point of the country quickly. This is something that not only Russian railway carrier can do now, therefore Baltika is looking to develop its own park of the train cars equipped with special technologies.

Oleg Luchkov, Managing Director of Armavir Factory of Heavy Mechanical Engineering: JSC Armavir Factory of Heavy Mechanical Engineering is a major player on the market of railway mechanical engineering because of the quality of our products and our orientation to the client. The recognition of our enterprise by such a large and successful company as Baltika is very much appreciated and opens new horizons for us. We hope for further fruitful and mutually advantageous cooperation with OJSC Baltika Breweries.

Baltika Breweries is the national leader in distribution of its products in Russia (Baltika beer is represented in 98% of shops in this country), in many respects thanks to an effective system of logistics. Over the last 6 years the company worked on equipping train cars with thermal insulation materials according to technology for beer transportation developed in cooperation with State Unitary Enterprise VNIIAS of the Ministry of Railways.

Baltika is the largest brewery in Russia, with 10 breweries and 3 malt houses in 9 regions of Russia, making beer under Baltika, Tuborg, Carlsberg, and other brands. The main shareholder is the Baltic Beverages Holding (ВВН). In 2006 Baltika merged with Vena, Pikra and Yarpivo brewing companies.

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