In Q1 2020 the volume of the company’s sales increased by 1.4%* as compared to the same period in 2019. Baltika launched several new beer brands in the Russian market: Baltika 7 Myagkoe, Baltika Avtorskoye, Hop & Friends Pale Lager and Vienna Lager, as well as fruit and berry flavored beverages – Seth & Riley’s Garage Hard Californian Pear, Somersby Blackberry and kvass Khlebniy Krai Belorusskiy recept. The company also updated the packaging of several brands: Carlsberg, Arsenalnoye, Flash Up energy drink and Siberian beer brand Kedrwood.
Baltika’s investments reached 642 million rubles* in Q1 2020, which is 56% more than Q1 2019. The key areas of investments are fridges and equipment for non-alcoholic beer production. Baltika is the leader of the Russian alcohol-free beer segment with a share of 42,5%**.
The COVID-19 virus had no significant impact on the company’s performance during Q1 2020 as the restrictions only affected sales in the last days of March.
The company adapted its operations to fulfill all obligations to customers & distributors and ensure supply of products in full. Hotline for the partners was set up, the maximum number of employees was transferred to work from home, business trips canceled, cleaning and sanitary measures on sites have become more frequent, hand sanitizers were set up, personal protective equipment such as masks, gloves, sanitizers was purchased for employees and mandatory temperature & health checks were arranged.
Lars Lehmann, President of Baltika Breweries LLC, Executive Vice President Eastern Europe of the Carlsberg Group said: “The health and safety of our employees is our top priority and we have early on taken all necessary measures to protect them from COVID-19. I am proud that despite the challenges caused by COVID-19 we continue to provide a high level of service to our customers and support our great brands. Baltika supports the local communities across Russia during the COVID-19 crisis and so far, we have donated more than 500,000 masks, gloves etc and 170,000 alcohol-free drinks to elderly, health staff and volunteers – and we will continue to do so! The Carlsberg Foundations have donated 95 mDKK (1.02 BRUB) to accelerate the development of a COVID-19 vaccine and initiatives to help people affected”.
Baltika is one of the biggest taxpayers in the regions of its operation. The tax payments of the company to the Russian budget equaled to 10.8 billion rubles in Q1 2020 of which 68% are excise duties (7.3 billion rubles)*.
The Eastern European region delivered solid numbers. Revenue grew organically by 2.2% as a result of a price/mix of -1% and an organic volume growth of 3.3%. Reported revenue grew by 5.5%, supported by a 3% positive currency impact.
All markets in Eastern Europe reported volume growth, with particularly strong growth in Kazakhstan. Volumes in Russia and Ukraine grew by low-single-digit percentages. In Russia, we saw signs of improvements in volume development and market share trend at the end of the quarter as we gradually implemented our changed commercial priorities.
The negative price/mix was mainly the result of a higher level of promotions in Russia as we adapted to the challenging competitive environment.
* proprietary data of the Carlsberg Group.
** retail audit data of Nielsen Research Company in value terms with respect to urban and rural Russia markets.
Baltika Breweries LLC, a part of the Carlsberg Group, is one of the largest producers of consumer goods in the country. Baltika owns 8 factories in Russia. The company is a significant part of the Carlsberg Group and its Eastern Europe region, which also includes Azerbaijan, Belarus, Kazakhstan, and Ukraine. Baltika Breweries LLC is a top exporter of the Russian beer: the products of the company are present in more than 75 countries around the world. Thanks to the superior quality, Baltika brands gained more than 670 Russian and international awards in the professional and consumer competitions.