Baltika Breweries remains confident leader on the beer market

november 2, 2017

Baltika Breweries, part of the Carlsberg Group, announces Q3 and 9 months 2017 results:

According to Baltika Breweries internal data, in H1 2017 beer market continued to fall and declined by an estimated 5% for the 9 months of 2017. Negative market dynamics was due to PET packaging volume restrictions of more than 1.5 liters on production and selling, cold summer months in parts of the country and continued challenging consumer environment.

While the beer market was declining, 5.6% volume sales growths of non-alcoholic beer for the 9 months of 2017 has become the positive trend. Non-alcoholic beer segment occupied 1,6% of the whole beer market in Q3 and showed growth both compared to Q2 2017 and 9 months 2017. Main non-alcoholic beer sales growth drivers are brewers serious investments in high-tech equipment, brand marketing and trade marketing. The development of non-alcoholic beer brands is in line with the government targets to decrease harmful use of alcohol within the general trend supporting healthy and active lifestyle.

In addition, takeaway draft beer segment (DIOT), which amounted to 10.3% of the whole beer market for 9 months, showed 2.1 p.p. increase compared to 9 months of 2016.

In Q3 and for 9 months 2017 Baltika Breweries sales volume declined impacted by Q3 2016 tough comparables provided by warm weather. However, PET packaging volume limitation of more than 1,5 liters had the most severe impact. To adopt to the market changes Baltika Breweries has implemented value-based approach and adjusted pricing policy. Some competitors have chosen volume-based approach. Consequently, Baltika’s products in the PET segment were priced at a premium vis-à-vis the average price points in the market.

For 9 months Baltika Breweries’ volume market share declined to 32.1% compared with the same period of the previous year, while in Q3 the share increased by 0.2 p.p.* compared with Q2 2017. Market share declined mostly in lower-priced PET-segment.

Herewith Baltika keeps beer market leader position having left competitors far behind.

Against volume and market share decline, Baltika Breweries continued to show very positive price/miх development (+9%).  

Baltika is №1 (in terms of volume and revenue) in the take away draft beer (DIOT) segment with a market share of 20.7%*. In 9 months 2017 Baltika Breweries increased its volume share in DIOT (Draught in off-trade) channel by 7.0 p.p.* compared to the similar period of the last year.

Baltika retains its position of the undisputed segment leader of non-alcоholic beer segment with the share of more than 55%*. Baltika’s non-alcoholic brands have broad distribution - the company's products are represented in large trade networks, as well as in traditional trade channels throughout the Russia. Baltika 0, for example, has the maximum distribution among all non-alcoholic brands in the country.

Good progress for 9 months of 2017 showed Carlsberg (brand share increase of 0,9 p.p.*), Zatecky Gus (brand share increase of 0,7 p.p.*), Seth&Riley’s GARAGE (brand share increase of 0,2 p.p.*) и Baltika 3 (brand share increase of 0,1 p.p.*). Baltika 0, Baltika 9 and Tuborg confidently keep its positions on the market.

Baltika contributes a significant portion of tax revenues in the regions in which its headquarters and breweries are present. Over 9 months 2017 Baltika’s total tax contribution amounted to almost 44,5 bn RUB, aproximately 69,7% of which are excise duties (31 bn RUR).

Jacek Pastuszka, president of Baltika Breweries LLC, executive vice president Carlsberg Group Eastern Europe Region: «Baltika Breweries remains the confident leader of the Russian beer market, showing strong financial results and strengthening its positions in growing segments. PET packaging volume limitation of more than 1,5 liters continued to  cause our volume decline as expected. It is a serious restriction, that affected the whole market. To change the Russian beer market falling trend it is necessary to update the legislation taking into account new realities and peculiarities of production, turnover and storage of various alcoholic beverages categories. Improving the legislation will help to stabilize the situation on the beer market and increase the competitiveness of legally produced alcohol products. We believe that the dialogue with the government has recently become much better than in previous years, and we are also counting on a constructive discussion of all further changes in regulation, including the modernization of Federal Law 171, with industry representatives".

Carlsberg Group Eastern Europe region results:

Net revenue in Eastern Europe declined organically by 2% (9M: -2%). The very positive price/mix development continued and we delivered +10% (9M: +9%). Total volumes declined by 10% (9M: -9%). Reported net revenue declined by 1% (9M: +9%), as the currency impacted moderated compared with the very positive impact during H1.

 * Source:  Nielsen Retail Audit, Urban & Rural Russia

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Baltika Breweries, part of the Carlsberg Group, is one of the largest companies in Russia in the sphere of consumer goods production, №1 on Russian beer market since 1996. Baltika Breweries has got 8 breweries in Russia and a large brand portfolio. The company is being the significant part of Carlsberg Group and its Eastern Europe region, which also include Azerbaijan, Belarus, Kazakhstan and Ukraine. Baltika Breweries is the major Russian beer exporter: with the products available in more than 75 countries of the world, in 43 of which Baltika Breweries is the only Russian beer exporter.

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