Regional economies: a common pattern or exclusive development model?

june 16, 2016

Jacek PastuszkaBaltika’s CEO Jacek Pastuszka participated in the panel session “Regions of Russia: Narrow Focus or Integrated Development?” included in the plan of the milestone 20th St. Petersburg International Economic Forum taking place in Expoforum Convention & Exhibition Arena on 16-18 June 2016.

The company’s plants are located in eight regions, and Baltika’s products are available in almost all national points of sale, thus the company’s senior officers possess in-depth expertise helping to assess diverse approaches to the investment policy typical of different regions of the country. Some representatives of governmental authorities and regional public organizations also spoke in the session.

The experts emphasized that there was and could be no common all-round approach for the Russian regions to the design of strategies aimed to steer growth and lure investments. Geographic, demographic and climatic factors compel the regions to diversify their economy. That is why regional authorities cannot rely on any federal patterns and shall build their own strategies of growth, principles of taxation and business incentives.

Spief2016According to Baltika’s CEO Jacek Pastuszka, diversification is a critical investment concept. A new flagship company in a region may spur investments as large manufactures create a buoyant demand driving related industries and SMEs.

Large industrial companies also play a key role in the regional growth. The thing is that such enterprises alone consume products offered by SMEs. For example, the presence of Baltika’s brewery and malthouse in Tula region has spurred the development of a farming complex as the company has been seeking suppliers of malting barley and other agricultural ingredients for brewing. Moreover, local farmers readily use waste materials left after brewing as livestock feed.

Baltika Novosibirsk creates a demand for materials and supplies for its packaging production in Siberian Federal District: PET preforms, corrugated packaging, stretch wrap, glass bottles. The regional manufacturers of PET preforms supply over 40% of their products to brewers and companies engaged in beer turnover. Over 30 companies of Siberian Federal District are involved in the smooth operation of Baltika’s plant in Novosibirsk. 

“We have highly successful and win-win collaboration with the local authorities in the regions of our reach. For example, several years of close-knit cooperation in Tula helped to shift to full local manufacture of raw materials for our local plant and create conditions for the sustainable growth of the farming sector. It also encourages us to invest USD40 mln in the production capacities of that region. In addition, we have paid almost USD40 mln excise duties to the budget of Tula region throughout 5 years. This is just one of the examples showing win-win cooperation with local authorities. We are establishing successful collaboration in other regions where we operate, for example, in Samara region, Khabarovsk Krai, Siberian region. It drives competitiveness of these regions. I would like to highlight that successful development of both regions and business requires a well-balanced regulation and readiness of both parties for a dialogue”, noted Jacek Pastuszka.

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Baltika Breweries, a part of the Carlsberg Group, is one of the largest FMCG producers in Russia. Since 1996, the company was ranked Number One in the Russian beer market. Baltika owns 8 plants in Russia and enjoys an expanded brand portfolio. The Company forms a significant part of the Carlsberg Group and its Eastern European region including Azerbaijan, Belarus, Kazakhstan, Ukraine and Uzbekistan. Baltika Breweries is a top exporter of Russian beer: Baltika’s reach includes over 75 countries; the company accounts for over 50% of all Russian beer exports. In 2015, Baltika's products became available in Romania, India and New Zealand. Its brands have won over 670 Russian and international professional and consumer awards.

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