Confident leadership: Baltika Breweries increased market share and sales volume

According to 1H 2018 results, Baltika Breweries, part of the Carlsberg Group, strengthened its leadership on the Russian beer market. In Q2 2018 company demonstrated sales volumes and market share growth as well as maintained high profitability.

Russian beer market

According to Baltika Breweries internal data, the Russian beer market grew by an estimated 1-2% in 1H 2018 driven by good weather in Q2 2018.

Non-alcoholic beer segment volume sales continue to show the stable growth: +38,4%* compared with 1Н 2018. Non-alcoholic beer segment occupied 1,7%* of the whole beer market.

Takeaway draft beer segment (DIOT) is developing steadily. According to 1Н 2018, it showed  2.4 pp * increase compared to the same period of last year and amounted to 12.5%* of the whole beer market.

Leadership strengthening

Baltika Breweries sales volumes increased by 10% growth in Q2 and by 1% in H1 2018. Sales volume growth was driven by market growth, focal efforts to develop big brands and the successful implementation of commercial programs.

Price/mix was flat, profitability remained strong with operating profit margin in excess of 20%.

Baltika Breweries has strengthened its leadership in the reporting period. Volume market share improved sequentially by 70 bp to 31.4% in Q2, flat versus Q2 last year, driven by positive performance of brands in the economy segment as well as new product launches in all price segments.

Baltika Breweries is the undisputed leader in key volume-generating sales channels. Regarding the results of 2Q 2018, Baltika Breweries is 1 in the growing modern trade channel with 31.1%* share and also continued to lead in traditional trade channel with 29.5%* share.

Besides, Baltika Breweries is the unconditional leader of non-alcоholic beer segment with the share of 51,3%*. 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.

Furthermore, Baltika Breweries is №1 in the take away draft beer segment with a market share of 22.5%*. In the 1H 2018 Baltika Breweries increased its volume share in the segment by 2.5 p.p.* compared to the same period of the last year.

Company export also continues to show steady progress. In the first half of 2018, Baltika Breweries export increased by 17% in volume terms compared to the same period last year.

Strong brands

Good progress for 6 months of 2018 showed main subbrands of Baltika portfolio – the biggest beer brand in Russia – Baltika 0, Baltika 7 (brand share increase of 0,1 p.p.*). Besides, superpremium Kronenbourg 1664 (+0,1 p.p.*) and premium Seth&Riley’s GARAGE (+0,2 p.p.*) also showed brand share increase. Consumers also appreciate the excellent quality at an affordable price of Arsenalnoye (brand share increase of 0.7 p.p.*), Zhigulevskoye (brand share increase of 1.6 p.p.*) and Bolshaya Kruzhka (brand share increase of 0.5 p.p.*).

High quality allowed company's brands to win prestigious awards of Russian and international contests. According to the results of the international tasting contest Superior Taste Award 2018 Baltika 0 was awarded the Golden Star and the title Good taste, and Baltika 7 was awarded with two Golden Stars, corresponding the characteristic Wonderful taste. The Arsenalnoye famous brand  received the Golden Quality Mark at the contest All-Russian Mark (III millennium). Quality mark of the XXI century.

Taх revenues and investments

Baltika Breweries contributes a significant portion of tax revenues in the regions in which its headquarters and breweries are present. Over 6 months 2018 Baltika’s total tax contribution amounted to almost 28 bn RUB, aproximately 65% of which are excise duties (18,26 bn RUR).

The company's total business development investment amounted to 1.4 bln rubles in 1H 2018.

Following one of Carlsberg Group sustainable development goals – ZERO water waste – Baltika Breweries continues to invest in the this area projects implementation. Currently, construction of its own wastewater treatment facilities at three breweries - in St. Petersburg, Novosibirsk and Rostov-on-Don – is in progress.

In addition, production facilities for drying brewer's yeast construction continued in Rostov-on-Don.

Jacek Pastuszka, president of Baltika Breweries LLC, executive vice president Carlsberg Group Eastern Europe Region: «Negative trend on the Russian beer market was reversed in the first half of the year. Baltika Breweries has strengthened its leadership on the growing market by now. We have achieved excellent results In the designated period: increased sales volumes and market share without losing in price/mix and profitability. This indicates the successful implementation of our plans and, of course, the high quality of our products. Now it is very important to support the emerging growth of the Russian beer market. The reasonable approach and predictability of the industry legislative regulation, as well as the constrictive dialogue between brewers and the regulator, are extremely important in this moment. At this stage, it is necessary to avoid the introduction of excessive measures, such as labeling and further restriction of PET packaging. Rational approach to these issues is not just support for the industry, but also a contribution to the development of regions where breweries are present».


* Global Company-meter Nielsen retail audit, Urban & Rural Russia


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