Heineken re-joins battle for Russian breweries

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Dutch brewing giant Heineken has increased its stake in Russia's
rapidly growing beer market for the second time in three months,
underlining the competition among big brewers to exploit the
potential of this newly crowned nation of beer lovers.

Spurred on by strong annual growth of 15 to 20 per cent at the company's St. Petersburg brewery, Heineken has bought up the Sobol Beer brewery in Novosibirsk, West Siberia.

The brewery, which was opened in August 2003, has a production capacity of 1.2 million hectolitres, giving Heineken an immediate base from which to expand production of its Bochkarev and Ohota brands.

Heineken executive board member, Jean François van Boxmeer, said: "This acquisition fits perfectly with our growth strategy for Russia. It reinforces our number three position and further strengthens our distribution and sales platform in this fast growing beer market."

The move follows on from Heineken's acquisition in August of Russia's Volga and Shikhan breweries, from shareholders of dairy company Wimm-Bill-Dann, as the Dutch brewer steps up its competition with the likes of Baltika (owned by Britain's Scottish & Newcastle and Denmark's Carlsberg) and Belgian-Indian partnership Sun Interbrew, jostling for position in what is now the world's fifth largest beer market.

Sun Interbrew and Baltika already have a strong presence in Russia as the country's top two beer producers and both have recently shown an interest, along with Turkish beverage giant Efes, in buying up the Pivoindustriya Primoriya brewery in Vladivostok.Russia is also the fastest growing beer market in Europe with 18 per cent growth between 1996 and 2003.

And Heineken expects the Russian market as a whole to grow by another 7 per cent in 2004, something which is keeping the company hungry for more. "We are keeping all our options open. Of course we will be looking for new opportunities in this fast growing market,"​ said company press officer Femke Risch.

Despite a 27 per cent drop in net profit for the first half of 2004, Heineken will pay for the Sobol brewery using available cash resources, though both parties agreed not to disclose the amount.

The company is currently considering whether or not to appeal against a one million euro fine, imposed last week by the European Commission after it judged Heineken, along with French company Kronenbourg, to have infringed EU competition law in France back in 1996.

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