Russia: Baltika Breweries selling stake in non-core malting plant

Russia’s leading brewer Baltika is selling its stake in the St. Petersburg malting plant Soufflet to the French Groupe Soufflet, RBK reported on May 26.

As a result of the deal the French group will own 99.97% of the plant’s total shares.

According to industry observers, Baltika’s decision to sell was most likely dictated by the crisis in the industry.

“Barley crop is very bad this year, the grains are small and of low quality. As a consequence, there is high risk of returns and various complaints. This can affect the malting plant’s financial results and malting is not Baltika’s core business,” a source is quoted as saying.

The source said, Baltika, as well as other industry players, would continue buying malt from the St. Petersburg plant. This was confirmed by a Baltika representative.

“The current situation on the beer market makes owning non-core assets quite a costly affair,” said Vasileostrovskaya brewery founder Nikolay Mitchin.

According to Baltika Breweries, Russia’s beer market shrank 4% in Q1 2017. In 2016, the market declined by 1-2% and in Q4 2016 by 4%.

According to Nielsen estimates, Baltika’s market share was 32.7% in Q1 2017, which is 0.5% less than in Q4 2016.

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