Prospects of the brewing industry discussed at Baltika's business itinerary at SPIEF 16

june 20, 2016

Президент Балтики Я.Пастушка выступил на сессии ПМЭФBaltika Breweries LLC, a Carlsberg Group company, was actively involved in 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 was the facilitator of the panel session and the company's representatives acted as experts during several discussions of regional and national economic development.

Baltika supported Russian Consumer as Viewed by Manufacturers panel session on the first day of SPIEF 2016. The discussion was attended by Anders Bering, Vice President Corporate Relations at Carlsberg Group, Anatoly Aksakov, Chairman of the State Duma Committee on Economic Policy, Innovative Development and Entrepreneurship, and top managers of leading Russian and foreign FMCG companies.

Speakers shared opinions on the issues the Russian economy faces due to rapid changes in the consumer demand in the country. Moreover, experts determined actions to be taken by the government to reinforce demand and ways business can help. Experts commented that the key to success was ongoing cooperation of the government and business on entrepreneurship control and minimum interference of legislators in the development of the market economy. Excessive government control should be replaced with self-regulation business tools. It is also important to have laws taking into account consumer preferences, e.g., no artificial restrictions of the manufacturing of a popular product or any preferential conditions for some players to prejudice others.

"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) or there are other ways such as self-regulation). I would like to mention that the dialogue between the brewing industry and the government, in particular, the State Duma, has recently improved and has become meaningful."

В рамках форума подписан протокл о намеренияхBaltika's President/Executive Vice President Carlsberg Group Eastern Europe, took part in the Regions of Russia: Narrowing Out or Scaling Up panel session held on June 16. Jacek Pastuszka explained why regions had to strive for diversification and build own development strategies. The representatives of the regulator and public organisations from all over Russia also took floor during the session.

"We have highly efficient and mutually beneficial relationships with local governments in the regions where we operate. Thus, we managed to fully localise raw materials manufacturing for our local brewery in Tula and shape conditions for sustainable development of the agricultural sector. That enabled us to invest USD 40 million in the manufacturing capacities in the region. And we have paid almost RUB 40 billion over five years as excises to the Tula Oblast budget. It is one of the examples of mutually beneficial cooperation with local authorities. We also have good progress with building fruitful relationships in other regions such as the Samara Oblast, Khabarovsk Territory, and the Siberian region to boost our competitiveness there," stated Jacek Pastuszka. "I would like to separately comment that the prerequisites of successful business development of regions and business are balanced control and mutual willingness to keep a dialogue."

Agricultural development in Russia was discussed in more detail at APCgrade: Agricultural Sector Reload panel session where Cees 't Haart, Carlsberg Group President, took floor. He emphasised that breweries were interested in the localisation of production of brewing raw materials, inventory, and equipment. In 2015 as in 2014, Baltika satisfied 100% of its demand for malting barley with supplies from national manufacturers. Since 2005, the company has invested over RUB 8 billion in Russian agricultural sector development. Those funds were allocated to the construction of necessary infrastructure and support of small and medium enterprises, Baltika's partners under the agricultural project. In 2015, the company signed contracts with 85 manufacturers of agricultural products in Russia. Baltika is interested in continuing business development in nation-wide and its specialists are involved in ongoing research aimed at preserving crops in acrid years and improving crops quality. For instance, Carlsberg Group has implemented its barley grade initiative specifically for Russian climate. The company's plant breeders have developed Сhill grade recorded in the Russian Register in 2012. Seeds were initially reproduced in Denmark and then in Russia under a license agreement with Carlsberg Group and transferred for growing to the best farms in the Tula, Lipetsk, Ryazan, Tambov, Vladimir, and Ivanovo Oblasts under Baltika's agricultural project.

Сессия Метаморфозы российского потребителя глазами производителяFor other manufacturers to follow Baltika' lead in creating a sustainable demand for Russian agricultural products, the government is required to provide different support to major companies.

Additionally to panel sessions, Baltika's management held meetings with federal and regional government representatives, including Alexander Khloponin, Deputy Prime Minister of Russia, governors of the Khabarovsk Territory, Novosibirsk, Rostov, Yaroslavl, Samara, and Tula Oblasts, and Vice Governor St. Petersburg and discussed the prospects of company development and the future of the brewing industry in general. The governor of the Vologda Oblast, Brewery President, and General Manager of the glass factory agreed on further cooperation between the Vologda Oblast, Baltika Breweries, and Chagodoschensk Glass Factory by signing a memorandum of intent at the Forum on June 17, 2016.

"We appreciate the efforts of the regional authorities, which foster a favourable investment climate and conditions for business development. It is especially important in these financially turbulent years. The Vologda Oblast is one of the regions where a predictability factor is closely monitored, as it is key to the evolution of business relationships between companies. It is the region where one of Baltika's major long-standing partners, Chagodischensk Glass Factory, operates. It is one of the key suppliers of highly demanded bottles for our breweries. In market volatility conditions, our partners have also felt the pressure on our industry for several years now. And the willingness of parties to have a meaningful dialogue and jointly look for optimisation solutions is especially valuable in this environment. We have been partners for many years and are confident that the experience we have accumulated so far will make us sustain our reliable cooperation in the future," commented Jacek Pastuszka.

***

Baltika Breweries LLC, a Carlsberg Group company, is one of the largest FMCG manufacturers in Russia and No.1 in the Russian beer market since 1996. Baltika has eight breweries in Russia and a wide brand portfolio. The company is a major business of Carlsberg Group and its Eastern Europe region which also includes Azerbaijan, Belarus, Kazakhstan, Ukraine, and Uzbekistan. Baltika Breweries is the leading exporter of Russian beer: Baltika's products are sold in over 75 countries and it accounts for about 50% of all exports of Russian beer. Company brands have more than 670 Russian and international awards from professional and cosumer competitions.

Move Up