August 17, 2009
just-drinks.com editor's weekly highlights
U.S. Drinks Conference 2009, Tues./Wed., Oct. 13 and 14 at the Helmsley Park Hotel, New York.
Some of the bleakest figures for drinks firms in the current economic downturn have emerged from Eastern Europe, and particularly Russia. In the last couple of weeks, it has been the brewers' turn to feel the heat in a country not so long ago viewed with tremendous optimism by the beer industry.
Carlsberg this month said Russia's beer market is likely to shrink by up to 6% in volume terms in 2009, after the group previously anticipated a 2% drop. Anheuser-Busch InBev chimed in last week with a similarly downbeat tone on the country, reporting that its own Russian beer volumes fell by 12% for the first six months of 2009, compared to the same period of last year.
SABMiller reported in July that Russian beer volumes fell 9% for the three months to 30 June.
What's to blame? It's the economy, stupid. Last week, the Russian Government announced that the national economy (gross domestic product) shrank by a record 10.9% in the second quarter of 2009; largely impacted by a fall in global demand for oil, of which Russia is a key exporter. Forecasts for the remainder of 2009 and 2010 are bleak.
Coupled with this, brewers are fighting a rearguard action against tax rises on their products.
Of course, with a population of 140m, large oil reserves ultimately still in need by foreign powers and a relatively undeveloped consumer market, Russia remains a decent bet for long-term growth.
However, the unflinching optimism of the past has been replaced by hope and educated guesses.
Meanwhile, in other news last week, Heineken's US president confirmed that he was leaving the company. The departure of Don Blaustein means that Heineken USA has had three presidents depart over the past five years. Could this be an indication that the US beer market is as tough as the UK's, where the merry-go-round of unit leader departures has been pretty lively of late?
Down in Australia, Constellation's European and Australian head, Troy Christensen, talked to just-drinks last week. Christensen told us that the two divisions are looking to realign their operations, to work more efficiently going forward. The news follows last month's quarter one results for the wine giant, which clearly highlighted the need for change.
Finally, on the features front, Annette Farr took the soft drinks industry to task over its use of the term 'innovation', while Raghavendra Verma considered the dangers facing drinks companies in India when it comes to the country's raw material production.
Until next time...
Olly Wehring, Managing Editor
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Innovation is a much banded-about word in the world of soft drinks. And nobody likes to bang on more about innovation than The Coca-Cola Co. The company's global strength and leading status stems from one drink - classic Coca-Cola – yet every new cola variant is still heralded as being innovative, claims Annette Farr.
With the drinks industry not always getting a good press, it really needs to make its case before governments and international organisations. As a result, effective lobbying is crucial for the drinks industry on the national and international political scale. Here just-drinks takes a look at how the drinks industry goes about its lobbying business and focuses on who takes its message to political power brokers around the world. It’s a tough job, but the rewards of an effective lobbying strategy can pay dividends many times over in terms of legislation that does not punish the sector and government policy that is realistic as well as effective.
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