ANALYSIS-Russian beer boom tempts Heineken By Samantha Shields MOSCOW, Feb 4 (Reuters) - Dutch brewer Heineken NV's purchase of Russia's fourth largest brewery, Bravo International, is a safe bet as traditionally vodka-drinking Russians swill more beer every year, analysts said on Monday.
But the domination of the local market by the Finnish/Danish combine Baltic Beverage Holdings (BBH) and Russian-Belgian Sun Interbrew means other potential investors will have a harder job finding further good acquisitions. Heineken shares were trading 1.8 percent higher at 46.33 euros in Amsterdam, while Baltika last traded at $11.450 on February 1, just below the year's high. Sun Interbrew's GDRs were at 7.85 euros, up 12.14 percent. Sun Interbrew is a partnership between Russia's Sun Group and Belgian brewing giant Interbrew of which the latter owns 44.5 percent. "The continued strong growth of the Russian beer sector, no doubt the primary attraction of the market for Heineken, means competitive pressures will continue to be relatively mild," said Kim Iskyan, senior equity analyst at Renaissance Capital. He added that sales in Russia's beer market had grown by 21 percent in 2001, following a 22 percent increase in 2000 and a 33 percent jump the previous year. Heineken said on Friday it would buy Bravo for $400 million, a figure Russian analysts said was high. St Petersburg-based Bravo sold 2.5 million hectolitres of beer and 400,000 hectolitres of alchoholic cocktail drinks in 2001. The move followed the purchase of Voronezh Brewery in southern Russia earlier in the week by BBH, which makesthe market leading brand of beer, Baltika. RUSSIAN BEER HAS GOOD GROWTH PROSPECTS "We think that this should lift food and beverage stocks in general. Heineken is paying a full price. We estimate that it paid $100 per hectolitre of production while, while Baltika trades at $95 (per hectolitre) and Sun Interbrew at $42," Troika Dialog said in a daily note to clients. Russians currently annually drink 44 litres of beer per capita, compared with figures in the 140s in Germany and the 160s in the Czech Republic, according to Alexei Krivoshapko, consumer goods analyst at United Financial Group. He estimated that Russian per capita consumption could increase to 60 litres by 2007. "Heineken is obviously confident the market will continue to grow, the acquisition is sending that message," he said. But Bravo was the last of the small, good quality brewers up for grabs, he added. Iskyan agreed. "The quality of the Bravo production facilities, which are relatively new and most likely in need of little investment, justifies some premium, although the premium paid appears high," he said. Beer is not legally seen as alcohol in Russia and advertisers stress its lighter image by targetting younger people and women. "Vodka consumption has flattened while beer consumption is growing, arguably due to effective advertising," Iskyan said. Krivoshapko said pushing beer could be seen as a way of converting hardened vodka drinkers to softer beverages in a country where the average consumption of spirits is 14 litres a year. "They don't die from drinking beer but they do from drinking vodka," he said. THE END ==^================================================================ This email was sent to: archive@jab.org EASY UNSUBSCRIBE click here: http://topica.com/u/?bUrHhl.bVKZIr Or send an email to: [EMAIL PROTECTED] T O P I C A -- Register now to manage your mail! http://www.topica.com/partner/tag02/register ==^================================================================
