Big global players in brewery: big SEE production

IndustrySouth-East European INDUSTRIAL Мarket - issue 6/2007

Even the countries in the SEE region are proud with well developed local production of beer - more than successful and at significant European level - the international investments in brewery facilities are big to enormous. In most of the countries there are huge for the region level breweries offering wide range of international or local brands. In the new or modernized beer factories – some with centuries’ traditions – the production equipment and organization are established at European level. Based on official sources we are presenting the SEE beer production and business of few of the biggest global names in brewery – Carlsberg, Heineken, InBev, and SAB Miller.

Eastern Europe accounts for almost 10% of Carlsberg’s revenue

and is home to a number of attractive markets with good growth prospects, says the official statement of the company. The operations of Carlsberg covers Poland, Turkey and a number of countries in the Balkans. Company enjoys the entry of Romania and Bulgaria into the EU at the beginning of this year expected to enforce the growth in the longer term. “The business is in a development phase in several places. Our strategy includes initiatives to streamline and strengthen the product range, which includes improving our position, both in the mainstream segment through national beer brands and in the premium segment throu~h both national and international brands, in particular Tuborg. Our strategy also focuses on ensuring consistently high quality and optimizing our sales efforts”, the company says.

In 2006 Carlsberg started up a sales company in Bosnia-Herzegovina to sell and distribute beer from the Serbian and Croatian breweries. Carlsberg plans to further strengthen its position in the Balkans in the coming years.

Part of Carlsberg South East Europe

Carlsberg Bulgaria

currently is one of the biggest players at Bulgarian beer production (official info for 2007 points out market position 3 and market share of 22%). The breweries owned (Carlsberg Ownership: 79,516%) are 2 – Shumensko pivo and Pirinsko pivo. Carlsberg Bulgaria employed about 500 employees and is “one of the leading investors in the country, contributing to the local and national economy and setting high standards for the brewing industry and the environment”. The brands produced in Bulgaria include Carlsberg, Tuborg Green, Holsten, Shumensko, and Pirinsko. The annual beer consumption per person in the country is pointed to be 68 litres.

Carlsberg Bulgaria history roots dated 1882, when Franz Milde - the Czech brewmaster, opened in the Bulgarian town Shumen the brewery Shumensko pivo together with few local businessmen, which is known as the oldest beer factory in the country. The modern history of Carlsberg Bulgaria started in 2002, when Carlsberg acquired a majority shareholding in Shumensko pivo and, later the same year, in the Pirinsko pivo brewery (founded 1971). The two breweries merged and in 2004 is established Carlsberg Bulgaria.

“The Shumen brewery began local production of Tuborg in 2004, and in 2006 sales of the brand increased by 33.5% in just one year. Holsten has also been produced locally since 2006, but Carlsberg beers are imported”, Carlsberg information says.

United Romanian Breweries or Tuborg Romania

Based in town of Ilfov, the brewery has a production capacity of 1.4 million hl. Carlsberg defines it as the first beer company in Eastern Europe to develop a modern brewery from a greenfield project. United Romanian Breweries with Carlsberg ownership of about 16% employs more than 850 people and is very important factor in the Romanian economy and social life. According to the Carlsberg data “around 4000 others through dealers, distributors and suppliers directly connected with the company’s activities”. The brands produced in Romania are Tuborg, Tuborg Strong, Tuborg Christmas Brew, Carlsberg, Skol, Holsten and according to the company the market share is 8.6% and market share of Tuborg as premium brand is over 50%. The total beer market is 16 million hl and the consumption per person is 72.2 litres per year.

Carlsberg Croatia

is the most modern and fastest growing brewer in Croatia, contributing to the national and local economy as a responsible employer, business partner and producer of top quality brands, Carlsberg describes the company which also consists Carlsberg South East Europe. In the competitive Croatian beer market with consumption per capita of 80 litres the market is developing fast. Carlsberg reports: “Since 2003, it has increased its total sales by 28% over a period when the Croatian beer market as a whole has declined by more than 4%. Exports have also increased”. The Croatian market is pointed as around 13% but fast growing.

Carlsberg has well-established traditions in Croatia producing in Panonska Brewery (founded 1971) Tuborg beer under licence since 1972. In 1994, Carlsberg acquired a 10% shareholding in the Panonska brewery, and in 2002 became a majority shareholder (80% ownership). Panonska changes its name to Carlsberg Croatia in 2004.

New Panonska Brewery was opened in Koprivnica in 1997. Currently it has production capacity of 550 000 hl of beer per year and is one of the most technologically advanced in Europe. Carlsberg is proud with its ownership of “the only brewery in Croatia with a wastewater treatment plant, setting high standards for environmental protection and responsible business”. It employs about 300 people. The brands produced includes Carlsberg, Tuborg Green, Tuborg Gold, Pan, Podravka, Kaj

PT Beverage World Limited & SIA E.E.

Even in hot Greece the preferable and traditional drink is wine the beer market is developing fast. The consumption per person is about 40 litres per year. According to Carlsberg data the import of beer is about 9% of all sales and licensed production represents 79% of all consumption, with lager-style beers dominating the market.

Carlsberg history in Greece starts by introducing Carlsberg in 2001 and is marketed as a premium brand. It is imported from Photos Photiades Breweries, the Carlsberg brewery in Cyprus, and distributed by PT Beverage World Ltd. through regional wholesalers.

Carlsberg company do not produce directly in Greece – its Tuborg Club Soda and Tuborg Tonic Water are produced under licence by Coca Cola Hellenic Bottling Company S.A. and are very popular in the Greek market.

One production site but with production capacity of 200 million litres per year has

Carlsberg Srbija d.o.o.

With its production based in Celarevo (130 km north of the capital of Serbia Beograd), Carlsberg brewery continues the traditions founded 1892 in Pivara Celarevo. Carlsberg becomes the majority shareholder in 2004 and Carlsberg Srbija d.o.o. is 99.9% owned by Carlsberg Group. In a market of annual beer consumption per person of 60 litres Carlsberg Srbija has 17% market share for 2005 and market position No 2.

Carlsberg Srbija is one of the most successful privatization and foreign investments in Serbia, say Carlsberg sources. Now 440 employees work in the factory. The brands Lav, Lav Premium – traditional and very popular in the country - are produced in the factory and Tuborg is the first international brand produced in Serbia and Montenegro (still produced together with Tuborg Xmas Brew brand). That is one of the reasons helped the company to grow by 65% and take second place in the Serbian beer market in 2005.

Carlsberg Srbija is part of Carlsberg South East Europe.

Turk Tuborg A.S.

located in Istanbul, Turkey. Carlsberg Group owns 95% of it taking the majority shareholding in 2001. “The foundations of Turk Tuborg Bira ve Malt Sanayii AЄ were laid in 1967 through a partnership between Tuborg Breweries and Yasar Holding. Production started in 1969 with the first locally produced Tuborg brand. Turk Tuborg has the largest beer production capacity in Turkey, at 36 000 tons of malt and 200 million litres of beer. It has always been an innovator in both its product range and packaging, and in 2007 it launched Turkey’s first flavoured beers - T-Beer Mexicana and T-Beer Lemon”, company sources say.

The Carlsberg brewery in Turkey currently employs 546 people. Turk Tuborg production points out market position 2 and market share 16.5%. The Turkish beer market features big total beer market of 800 million litres and the low level of consumption per person of 11.7 litres. “Around 20% of its production is exported and the brewery has increased its overseas sales by 16% since 2005. Turk Tuborg brands are now sold in more than 20 countries – including the USA and some Latin American countries”, says the official Carlsberg source. The produced in Turkey brands include Carlsberg, Tuborg Green, Tuborg Gold, T-beer, Tuborg Winter, Tuborg Special, Skol, Venus, Troy and Battery.

The international brewer

Heineken N.V.

is operating in almost every country in the world. The company owns over 115 breweries in more than 65 countries. “With a Group beer volume of 132 million hectolitres Heineken ranks fourth in the world beer market by volume. Heineken strives for an excellent sustainable financial performance through marketing a portfolio of strong local and international brands with the emphasis on the Heineken brand, through a carefully selected combination of broad and segment leadership positions and through a continuous focus on cost control. In 2006, revenues amounted to 12 billion EUR and net profit before exceptional items and amortization of brands amounted to 930 million EUR. Heineken employs over 57 500 people”, says official corporate announcement.

Heineken in SEE region

Zagorka Brewery in Bulgaria is located in the town of Stara Zagora. Except the traditional local brands Zagorka, Ariana and Stolichno, Zagorka Brewery produces also Amstel and Heineken beers. Athenian Brewery is the name of the production facility in Greece located in Athens. The brands produced in it include Amstel, Heineken, McFarland, Murphy’s Irish Stout, Alfa, Buckler, Fischer, Desperados, and Zorbas. Heineken’s production facility in Macedonia is called Pivara Skopje. The brands produced there are Amster, Heineken, Gorsko and Skopsko. In Romania there are several production facilities – in Bucuresti, Constanta, Craiova, Hateg, Miercurea Ciuc. The brands produced include Heineken, Bucegi, Ciuc, Gambrinus, Golden Brau, Gosser, Schlossgold, Silva.

Heineken Adria

“Former Yugoslavia consists of newly independent republics that are still in transition politically, economically, legally and socially. Heineken Adria is active in Croatia, Slovenia, Bosnia and Herzegovina, Kosovo, Serbia and Montenegro. This area is promising and very much on the move. The beer market varies from developed (Croatia) to highly difficult (Kosovo). The company manages and trains five distribution partners and takes care of the marketing investments for the whole Heineken portfolio. Heineken has an excellent image and the Heineken brand is the most intensively distributed beer in the whole region”, says the corporate web site of Heineken.

Heineken owns 94.42% of Heineken Adria. According to the Heineken data the total domestic beer market for 2003 is 3 334 000 hectolitres. Karlovacka Pivovara in Croatia, located in the town of Karlovac, was recently acquired. Karlovacka Brewery is Croatia’s second-largest brewery, produces 625 000 hectolitres in 2003 and the number of employees (FTE) is 573. Company’s market share in domestic market for 2003 was 18.7%. Local brands produced are Heineken Pilsener, Murphy’s, Desperados, and Karlovacko.

The newest brewery that it is to acquire by Heineken is

Rodic Brewery, in Novi Sad, Serbia

The official announcement is done at 5th of December 2007. The acquisition is subject to the necessary regulatory approvals. The acquisition price is not disclosed. The transaction will be funded from existing cash resources and will be earnings enhancing in 2010 and value enhancing in 2011.

The company was established in 2003 and employs 282 staff. The Rodic Brewery facility is a state-of-the-art, 1.5 million hectolitre brewery, located in Novi Sad, northern Serbia. The company’s portfolio consists of the beer brands MB Premium, MB Pils and Master. It is estimated that total 2007 sales volume will be 500 000 hectolitres.

Nico Nusmeier, Regional President Central and Eastern Europe, Heineken N.V., commented: “This transaction further expands our leadership position across the fast growing Central and Eastern European region. The domestic and emerging export business of Rodic will make us the number 3 player in the Serbian market and with the modern facilities and brand portfolio we are well positioned to build a strong platform for the Heineken brand as well as an increasingly profitable business.”

In 2007, it is estimated that the Serbian beer market will grow between 3-5%. The market’s estimated total annual consumption in 2006 was 5.6 million hectolitres. Per capita consumption was 52 litres in 2006.

InBev

is the world’s leading brewer, realizing 13.3 billion euro in 2006. The company has a strong, balanced portfolio, holding the number one or number two position in over 20 key markets – more than any other brewer. It has a key presence in both developed and developing markets, active in 7 out of the 10 of the fastest growing markets worldwide”, says the corporate web site.

InBev is based in the town of Leuven in Belgium. It is operating in more than 130 countries differentiating six operational zones: North America, Western Europe, Central and Eastern Europe, Asia Pacific, Latin America North, and Latin America South. The total number of InBev employees worldwide is about 88 000 people.

InBev is worldwide recognized with its four global brands, Stella Artois®, Beck’s®, Leffe® and Brahma®. In its portfolio InBev has more than 200 local brands.

InBev in SEE region

In 1995 the Kamenitza brewery was acquired in Bulgaria. Now Kamenitza A.D. consists 3 breweries – in Haskovo, Pleven and in Plovdiv. The main distributed brands include Astika, Beck’s, Burgasko, Hoegaarden, Kamenitza, Leffe, Pleven, Slavena, Stella Artois. In Croatia InBev acquired Zagrebacka Pivovara in the town of Zagreb in 1994. The main distributed brands by Zagrebacka Pivovara d.d. are Belle Vue Kriek, Beck’s, Boћicno, Hoegaarden, Leffe, Ozujsko, Stella Artois, Tomislav and Union.

Date of acquisition is 1994 of Interbrew Romania S.A., based in Bucharest. Currently the breweries are 3 - Bianca (in the town of Blaj), IEB (in Ploiesti), and Proberco (in Baia Mare). Among the main distributed brands are Beck’s, Bergenbier, Caraiman, Efes, Hoegaarden, Hopfen Konig, Leffe, Noroc and Stella Artois. In Serbia InBev acquired Apatin, AD Apatinska Pivara in 2003. The Serbian brewery is located in the town of Apatin. The main distributed brand is the popular local brand Jelen. In 1997 InBev acquired the brewery of the town of Niksic in Montenegro. Today the company operating in Montenegro is named Industria piva i sokova Trebjesa A.D. (IPS Trebjesa A.D.). The main distributed brands include Beck’s, Nik Cool, Nik Gold, Niksicko Pivo, Niksicko Tamno, Staropramen and Stella Artois.

SABMiller

was among the early movers into the post-communist growth markets of Europe starting in the mid-1990s. “We are a proven consolidator in the region and now have domestic operations in nine countries representing a combined population of over 350 million. The majority of our European businesses are located in Eastern Europe: Kompania Piwowarska in Poland, Plzensky Prazdroj in Czech Republic, Transmark in Russia, Ursus Breweries in Romania, Dreher Breweries in Hungary, and Pivovar Saris in Slovakia. We also own Compania Cervecera de Canaries in the Canary Islands and Birra Peroni in Italy. In the United Kingdom, investment is being made behind Miller Brands UK Limited which was launched in 2005 to market, sell and distribute our international premium beer brands. Additionally, we export beer across Europe with volumes doubling over the past five years.

SABMiller”, says the corporate web site of SABMiller.

Currently the company has totally 19 lager breweries in 8 countries in Europe - Canary Islands, Czech Republic, Hungary, Italy, Poland, Romania, Russia, Slovakia

“Eastern Europe has seen solid growth in national economies, disposable incomes and consumer spending, all of which should continue into the future. This has benefited the beer industry, as has a shift in consumers’ beverage alcohol preferences from local spirits towards beer. The result has been lager industry growth far surpassing global averages and per capita consumption trends increasing closer to the average level of northwest Europe”, company comments.

URSUS Breweries

in Romania includes 4 breweries. The first investment of SABMiller in the country is in 1996 in Vulturul Buzau, followed the next year by Pitber Pitesti and URSUS Cluj-Napoca. In 2001 Timisoreana was established. The soonest investment of SABMiller in Romania is Aurora Brasov in 2004. Brewing capacity of SABMiller is 3 168 000 hl. Total size of beer market in Romania is 14,586,000 hl and beer consumption per capita is 65 litres (data available for July 2006). Main brands of URSUS Breweries include Ursus, Timisoreana, Pilsner Urquell, Ciucas, Stejar, Peroni Nastro Azzuro.




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