Baltika Breweries, a Carlsberg Group company, supported the Russian Consumer as Viewed by Manufacturers panel session held on the first day of the St. Petersburg Internationall Economic Forum. The discussion was attended by Anatoly Aksakov, Chairman of the State Duma Committee on Economic Policy, Innovative Development and Entrepreneurship; Vladimir Gorodetsky, Governor of the Novosibirsk Oblast, Anders Bering, Vice President Corporate Relations at Carlsberg Group, and top managers of leading Russian and foreign FMCG companies.
The key agenda items the session participants discussed included: What is the way to build cooperation between business and government? Should legislators use administrative leverage against entrepreneurs? What actions are to be taken by the government and business to revive growth of the Russian economy?
Experts commented that the national economy had few sources of growth. The entrepreneurs' efforts are challenged by such factors as inflation, instability in the FX market, changes in foreign policy, reduction of the population's real income, and difficulties with gaining loans for business development. These difficulties result in a vicious circle: as a result, entrepreneurs find it more rewarding to be involved in trading, rendering of services, financial operations, meaning any liquidity-generating and fast payback business, rather than invest in long-term manufacturing facilities. Therefore, economy development is hindered from the inside. In order to turn the situation around and encourage entrepreneurs to invest in manufacturing, both laws that would normalise the business climate in the country and prevention of excessive administrative barriers are necessary.
The experts at the panel session stressed that business and authorities were eager and capable of efficient interaction and the government just had to prevent building any additional barriers for diligent and reliable entrepreneurs. They do not need out-and-out control. The Trade Law was mentioned as one of the factors of in out-and-out control. Any artificial restrictions of market relationships have a negative effect on the consumer sector which impacts a product price. Ant it means the buying capacity may decline even more.
All-round control over entrepreneurs should be replaced with the development and promotion of self-regulation business tools. Furthermore, the government and business must jointly develop solutions that could influence the entrepreneurs' investment activity.
"Government control must foster consumer demand and therefore GDP growth," commented Anders Bering, Vice President Corporate Relations at Carlsberg Group. "And it is essential for the authorities to have answers to the two following questions: do we need control over this area (or there are other ways such as self-regulation). I would like to comment that the dialogue between the brewing industry and the government, in particular, the State Duma, has recently improved and has become meaningful.
Moreover, if cooperation between the business and government develops, entrepreneurs will not suffer any unexpected impacts from new legislation. Otherwise, businessmen have to change development strategies again and that has a negative effect not only on the future of a company but on the national economy in general. Invariable long-term rules of the game are needed in this area.
And finally the economy essentially needs to understand consumer demands. Consumer activity and desires will shape the future of the market. There is no logic during a recession to create conditions that do not meet the buyers' requirements and put obstacles for demand development.”
Reflecting on the outcomes of the panel session, experts suggested that business and government should jointly develop economic "road maps". Furthermore, criteria must be in place to assess the influence of laws on the business environment to prevent administrative barriers for entrepreneurship and investment development.
Baltika Breweries LLC, a Carlsberg Group company, is a partner of the business itinerary of the 20th Jubilee St. Petersburg International Economic Forum held in Expoforum Centre in the Northern capital of Russia from June 16 to 18, 2016.
Baltika Breweries LLC, a Carlsberg Group company, is one of Russian major FMCG manufacturers and the leader of the Russian beer market. The company sells its products in more than 75 countries all over the world, including Western Europe, North America, and APR. Baltika produces over 40 beer brands at its manufacturing capacities in eight cities across Russia and employs 7,500 employees.