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just On Call - Russia ready to rethink beer regulation - Carlsberg CEO

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Carlsberg's CEO has said that Russia may reverse some of the regulations that has seen the country's beer market shrink and brewers close production sites.   

Carlsberg suspended production at a Baltika site in September

Carlsberg suspended production at a Baltika site in September

In a post-results analysts' call today, Jørgen Buhl Rasmussen said politicians in Russia have a “much better understanding” of the economic damage done by the regulations compared to a few years ago. He said he was aware of “more positive statements” on the regulations and that legislators will “maybe turn back” some of the laws.

Russia has seen beer duty rise six-fold since 2009 and a ban on sales from street kiosks and beer advertising was introduced last year. Last month, Anheuser-Busch InBev announced it was shutting down another of its Russian breweries - its fourth closure in the country in the last two years – while the previous month Carlsberg suspended production at one of its Baltika Breweries' facilities in Russia.

Asked why politicians are contemplating a U-turn on some of the regulations, Rasmussen said: “I think it's driven by a tough business climate but also by a much better understanding in politics that this industry has been through some very, very difficult years with a lot of negative consequences in Russia's regions.”

Meanwhile, Rasmussen warned analysts not to read too much into a large market share jump for Carlsberg in Russia in the third-quarter. The brewer, which saw profits drop in YTD results because of weakness in Russia, grew its volumes share of the country's beer market by 140 basis points in Q3. 

Rasmussen said: “Share will be up and down in the quarters so don't assume that every quarter will see that kind of growth. Overall trend lines are more important to look at.”

Year-to-date market share loss was 110 basis points, with Carlsberg blaming the launch of slightly smaller pack sizes to minimise price increases.

For a detailed look at Carlsberg's YTD performance, click here.


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