COMMENT: Foster's comes in from the cold
Foster's has announced plans to enter the Russian beer market through a venture with Baltika.
Foster's is to make its debut in Russia after an agreement was signed between the Foster's Brewing International and Baltika Breweries. Foster's will be brewed and marketed by the Russian firm. The lager brand is likely to be positioned as a 'super premium' offering aimed at wealthy young Russians: if successful, the wider brand may benefit from this cold climate chic.
The Australian brewer's Russian expansion forms part of its wider aim to become the third best-selling international beer by 2009. The company has entered into an agreement with Baltika Breweries, Russia's largest individual brewing company, to brew, market and distribute Foster's products in the country. Baltika is itself owned by Baltic Beverage Holdings, a joint venture between Carlsberg and Scottish & Newcastle.
Foster's entry into the Russian beer market is mainly driven by the rapid growth in beer drinking seen in the country, which is traditionally famous for its spirits. According to research by Datamonitor, the Russian beer market was worth $7.63 billion in 2003, and is the world's fifth largest market in consumption terms. It is Europe's second biggest market by volume after Germany. Per capita beer consumption stood at 50.7 liters in 2003, almost double the 30.2 liters seen in 1998.
Foster's rightly perceives the Russian premium lager segment to be a significant growth opportunity for its brand. Datamonitor forecasts the segment to almost double in value from 2003 levels by 2008, recording an average annual increase of 14%.
Foster's arrival into Russia comes on the back of other familiar western brands making their debut in the country. Scottish & Newcastle has introduced its Kronenbourg brand, again via the Baltika joint venture. This brand is positioned as an ultra-fashionable drink for Russia's trendy nouveau riche.
It is telling that Foster's is also being brewed and marketed by Baltika - doubtless both the Foster's Group and S&N will be hoping the brand gains similar cache in the country. This in itself would be quite a fillip for the lager: Foster's is not a brand that is regarded as especially premium in many western markets, but success as an exotic foreign beer in Russia may give the drink some extra credibility in other markets too.
As one takeover story trundles on, another one has just moved up a gear....
Foster's Group Ltd is expected to announce that it is lifting its offer for fellow Australian Southcorp, transforming three months of corporate hostility into a friendly takeover....
Shares in Southcorp and Foster's have been halted from trading, pending an announcement....
Southcorp's share price has dropped below the offer price made by Foster's for the first time today (18 April)....
Foster's Group is considering upping its bid for Southcorp prior to extending its offer once again....
Baltika has bought into a Siberian brewer....
In spite of trying to buy up Southcorp, Foster's could itself be a takeover target in the near future, according to press reports....
Fideuram Wargny has upgraded its rating of Pernod Ricard to 'buy' from 'hold'. Its analysts argue that the merger talks with Allied Domecq is a catalyst for share growth....
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