Russia: SABMiller is looking to expand in Russia through greenfield expansion
Brewing giant SABMiller is aiming at self-generated expansion in the fast-growing Russian beer market, hinting that it is not the favourite to buy the last big independent Russian brewer, Ochakovo, Reuters informed on April 5.
The world's second-biggest brewer, which brews Peroni, Pilsner Urquell and Tyskie beers in Europe, said on April 4 it favoured organic or greenfield expansion after walking away from a number of potential Russian acquisitions in recent years.
"We are looking to expand in Russia but it will probably be through greenfield expansion," Alan Clark, SABMiller's managing director for Europe, told a briefing covering its European operations, which make 18% of group profits.
Some of the world's biggest brewers including Belgium's InBev, Dutch Heineken and Turkey's Efes Breweries International have been snapping up Russian brewers to expand in the world's fifth largest beer market. But the normally acquisitive SABMiller has made no major purchases. Clark said SABMiller had walked away from a number of possible targets as they were not right for the group due to price, location or their beer product portfolio.
SABMiller is Russia's fifth largest brewer with a 4.5% volume share, behind top brewer Baltic Beverages Holding (BBH) - co-owned by Scottish & Newcastle and Carlsberg - with 36.3%, followed by InBev, Heineken, and Efes, but ahead of Moscow-based Ochakovo with 3.5%. Clark said other international brewers in Russia would be better placed to buy Ochakovo due to their bigger potential cost-saving synergies if the Russian brewer came up for sale.
SABMiller moved into Russia eight years ago and built a brewery at Kaluga, 180km southwest of Moscow, to produce local brands Zolotaya Botchka and Tri Bogatyria as well as its international brands Miller Genuine Draft and Pilsner Urquell.
Its lowly No 5 position compares poorly with its other seven European markets in which it brews beer - Poland, Hungary, Czech Republic, Slovakia, Romania, Italy and the Canaries - where the brewer is No 1 or No 2.
The Russian market, the world's fifth biggest behind China, the US, Germany and Brazil, saw volumes up 6% in 2005, and brewer BBH sees volumes rising 3 to 5% a year in the medium term.
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