UPDATE: RUSSIA: SABMiller outlines brewery build plans
SABMiller has defended its decision not to pursue acquisitions in Russia after announcing that it is to build its second brewery in the country.
The London-listed brewing giant said today (29 March) that it will spend around US$170m on building a facility near the city of Ulyanovsk, around 1,000km east of Moscow.
The brewery, which is expected to be up and running in early 2009, will boost SABMiller's capacity in Russia to around 9m hectolitres. The company already has one brewery in Kaluga, south-west of Moscow.
SABMiller has refrained from following a similar expansionist path to a number of its multinational rivals across Russia.
SABMiller, meanwhile, has eschewed buying local brands and focused its efforts in Russia on meeting the demand for premium licensed beers in cities like Moscow and St. Petersburg.
SABMiller's strategy has meant it commands only 6% of Russia's beer market, behind rivals including market leader Baltika, which is owned by Baltic Beverages Holding, a venture between S&N and Carlsberg.
However, a spokesman for SABMiller told just-drinks that, while the brewer has looked at beefing up its presence in Russia through acquisitions, it is happy with its focus on the premium category.
"We've taken a close look at opportunities in Russia but we've decided not to go ahead," he said. "The jury is still out on some of our competitors buying low equity brands for relatively high prices. Our business model is extremely successful - we have a very good return on capital."
The spokesman said SABMiller had "no plans whatsoever" to enter Russia's mainstream segment. The Russian beer market, he said, has polarised with premium and economy beers becoming increasingly popular at the expense of mainstream offerings.
SABMiller's investment comes as it looks to build on its buoyant sales in Russia. In the six months to 30 September last year, SABMiller saw its sales in Russia rise by over 20% in volume terms.
The spokesman said the brewer is expecting growth to be slightly ahead of 20% for the full year.
The Ulyanovsk brewery will produce Zolotaya Bochka, Czech beer Velkopopovicky Kozel and Miller Genuine Draft, three of SABMiller's best-selling brands in Russia.
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