Analysis - Russian tax relief can help Carlsberg boost volumes
Carlsberg can be optimistic over Russian volumes
Carlsberg will have the chance to revive its Russian volumes after authorities voted to ease back on beer taxes from 2015, an analyst has suggested.
Last week, Russia's parliament set an excise tax rise of RUB2 (US$0.06) per litre of beer for 2015 and a further RUB1 increase for 2016. The increases are lower than the RUB3-per-litre rise planned for next year, and 2010's rise from RUB3 to 9RUB, “a major contributor to the decline in the Russian beer market”, said Bernstein's Trevor Stirling in a note to clients.
“(The lower increases) hold out the prospect of a great deal more pricing flexibility for Carlsberg in 2015 and 2016 either to take higher net pricing or, more likely, to keep the real price increase of beer to a minimum and thereby stimulate some modest volume growth in the Russian market,” Stirling said.
According to Bernstein's analysis, Carlsberg in 2010 had to increase its gross selling price by 24% to cover the excise tax. In 2015, it will only need to raise it by 4.5% and in 2016 by just 2%.
Stirling also said that, while Russia's beer tax increases slow, excise duty rises on vodka will speed up. Authorities will raise excise on the spirit by RUB500 next year, up from a RUB400-increase this year. The rise will be RUB600 in 2015 and RUB660 in 2016, Stirling said.
Alcohol companies in Russia have blamed tax hikes for a drop in demand over the past few years. In June, Anheuser-Busch InBev said taxes and increased government regulation was behind its decision to shutter one of its breweries in Russia.
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