Tax hike proves no small beer for brewers

Tax hike proves no small beer for brewers

Russian breweries produced less beer in the first half of 2010 due to a Government tax rise, according to a report.

Russia's beer union has said that domestic production fell by 9.9% in the six months to the end of June, according to a local Reuters report this week.

The fall follows a three-fold tax hike on beer implemented by the Government in January. Distributors stocked up heavily in December to avoid the tax rise.
Carlsberg, owner of Baltika Breweries, which is Russia's leading brewer with a 40% market share by volume, recently predicted that the country's beer market would shrink by between 10 and 13% in 2010.

The market shrank by 10% in 2009 due to lower consumer demand amid the global economic downturn.

Most brewers have reported that they have passed on the costs of the tax rise to consumers, via price increases.

Not all companies' volumes have been suffering in 2010. Efes Breweries International last week reported a 12% increase in half-year beer volume sales in Russia.

The other major players, including Carlsberg, A-B InBev and Heineken, have yet to report half-year figures.