Efes Breweries International reports strong gains in Russia

Efes Breweries International reports strong gains in Russia

Efes Breweries International has bucked a decline on Russia's beer market by reporting a strong increase in sales in the first half of 2010.

Beer sales rose by 13% for the six months to the end of June, to US$472m, Efes Breweries International (EBI) said this week. A 12% rise in beer volume sales in Russia, together with a favourable Russian Rouble currency, drove the increase, said the Netherlands-based firm, which is wholly owned by Turkey's Anadolu Efes.

Russia accounts for around three quarters of EBI annual volumes and the brewer's success there compares to volume declines for all of its rivals over the same half-year period. Russia's beer market shrank by around 9% on the first six months of 2009, largely due to the effect of the Russian' Government's three-fold increase on beer excise tax.

Ayse Dirik, head of investor relations at EBI, told just-drinks today (25 August): "Despite increased sales prices in 2010 to reflect higher excise tax on beer in addition to continued economic challenges, strong brand innovation, continuous initiatives to increase availability and successful practices in marketing paid off.

"The low base of last year also contributed to this excellent performance in H1," he added. EBI beer volumes fell by 5% in the first half of 2009.

The firm said in its results statement that "well planned pricing moves, as well as favorable F/X rates, allowed EBI to maintain its net selling price per litre in USD terms almost flat in the first half of 2010 compared to the same period of the previous year".

Despite strongly outperforming rivals, EBI's market share in Russia only rose by 1% on the first half of 2009, to 10.3% at the end of June.

EBI also reported a fall in group operating profits for the half-year, down 2% on the same period of 2009 to US$40.2m. However, the brewer returned to the black with net profits of $29.7m, after one-off charges led to losses of $24.2m a year earlier.
EBI said that it expects full-year volume sales and profits to be higher than previously expected. Volume sales will rise in high single-digits, although net sales will increase at a slower rate "due to the phased approach for the price increases to cover the negative impact of significant excise tax increase and unfavorable mix effect in the Russian beer operations", said the brewer.