Finnish brewer Hartwall has reported strong first-half results ahead of consolidation into S&N. Hartwall benefited from increased sales at its Russian joint venture, BBH. But although this market has been growing fast for many years, it has recently shown signs of slowing down. Much of the growth this time round was driven by good weather - so S&N must pray for a warm autumn if it is to reap dividends from Russia.

Hartwall announced strong results for the first half of 2002. The group saw sales rise 33% to €484 million, while volumes rose by 27%. Much of this growth was driven by its Russian joint venture with Carlsberg, BBH.

BBH managed to increase volumes by 36%. Hartwall says that this corresponds to an increase in market share from 28% to 33%; it also says that the Russian beer market grew by 16% in the first six months of the year.

Beer has been booming in Russia since the early 1990s, driven by the demand for an alcoholic drink that's less strong than vodka. Market liberalisation has also been important, leading first to increased competition among local brewers, and more recently to consolidation in the hands of western-owned players such as BBH, Guinness UDV and SABMiller.

Even so, the strength of the latest BBH results might be surprising.
Datamonitor figures show Russian beer volumes rose by 9.1% in 2001, compared to 23% the year before. While this is still much faster growth than seen in any western European market, the trend growth rate has been slowing for several years.

So how has the country's leading brewer managed to deliver such impressive results? Part of the answer for BBH lies in acquisitions - it bought companies representing 2% of Russian beer output. But oddly enough, the good weather this spring might be the biggest driver. There's an established trend across all beer markets for warm weather to boost consumption; this is particularly significant in Russia, where over 80% of beer is sold in pubs and bars.

This could be bad news for Hartwall's new owner. Russia has had a gloomy summer, and the forecasts for autumn are not good.

Related research: Datamonitor, "Europe Beer 2002 - Interactive Market
Profiler" (IMCM0061 - available August 2002)