Blog: Chris Brook-CarterBear necessities

Chris Brook-Carter | 11 November 2003

Russia is a market under scrutiny at the moment. On an industry level, the news from brewer S&N that its subsidiary, Baltic Beverage Holdings, has re-evaluated its growth rates for the year, from 7-9% down to 5%, aggravates an already unsteady business environment.

This weekend sees the launch of the Russian International Wine & Spirits Fair, during a period of anticipation for the wine market, which continues to grow at 20-30% per annum. However, chaos still characterises the spirits sector, as the government and private business – in particular SPI - fight on for the ownership of the country’s most powerful brands. It is a situation that has been given an added edge by the arrest earlier this month of Mikhail Khodorkovsky, CEO of Russian oil company Yukos.

In terms of PR, the arrest has been an unmitigated disaster for a country desperately trying to convince the foreign business world to direct investment its way.

President Putin’s opponents fear that the arrest may set a precedent as the government moves for greater control over business and the economy – an accusation that has been levelled at the administration by SPI for some time now.

However in an interview this week on the business website cantos.com, Christopher Granville, the chief strategist with United Financial Group, the Russian investment bank, tried to allay those fears.

“This is a prosecution against certain individuals. It will not develop into a campaign against business, either Yukos as a company, as opposed to the prosecution of its individual major shareholders, let alone against business more widely in Russia.”

Worryingly though, he did admit that there were elements in the Putin administration which have an “agenda which goes well beyond the President’s declared agenda. That more radical agenda does seem to involve an idea that the privatisations of the ‘90s need to be reversed.” That said, he implied these elements were under control and that “the line of the President is holding”.

That line, according to Granville, includes doubling GDP in the next ten years, which depends on the investment culture. “It depends on strong investment, especially from foreigners, and therefore he wants to welcome in foreign investors,” he said.

Those after more information on the Russian drinks market should know just-drinks is giving away a report by the investment analysts Standard & Poor's on the future growth prospects of Russia’s brewers.

It is available to members here.

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