Belarus & Russia: “Baltika” is likely to participate in “Belsolod” reconstruction

Belarus Government made a call on Baltika Brewing Company to participate in the reconstruction and the modernisation of Belarusian “Belsolod”. Previously, the Belarusian Prime-minister Sergey Sidorskii affirmed it was ready to offer to the Russian brewery a production ground for the investment projects accomplishment, The Union of Russian Brewers communicated June 07.

Experts estimated this initiative can be envisaged as a possible oncoming join progress for “Baltika” and “Krinitsa”. In the mean time, it appeared that Belarusian authorities are asking the Russian brewer for money aiming to reconstruct and expand the malting facility. “Baltika” officials said that “Belsolod” is offering a potential interesting investment ground, among other possible investment projects. Analysts estimate “Baltika” can be interested enough to invest in the malting facility only if it is provided with a control stake in “Krinitsa”. Otherwise, the Russian brewer won’t get any substantial advantage in conquering the Belarusian market.

“Baltika” press-service confirmed that Belarusian side did make an offer to participate in the reconstruction and the modernization of open society “Belsolod”. ”During the Baltika’s heads visit to Belarus in mid-May this year, the Belarusian Government has expressed the willing to have “Baltika” participating in “Belsolod” reconstruction process. But “Baltika” officials specified that sides didn’t conclude any specific project. “Presently Baltika is not interested in a particular production field, the company is rather interested in enlarging its overall presence on the Belarus beer market” - the company said. In fact, the Belarusian side didn’t provide any serious proposals concerning any company’s share acquisition opportunity, including “Krinitsa”.

Analysts from IC “Finam” provided that Belarusian authorities are willing to bid no more than 49% of “Belsolod” shares in return for the money meant for the malting facility reconstruction. According to them, Belarus politics supposes that the company’s controlling stake can’t be alienated. Experts from the Russian marketing association estimate “Baltika” can adhere to such circumstances. “The project fits the company’s development concept – experts said.-“Baltika” plans to surge on other beer markets, and the Belarusian market is interesting and large enough and which competes by volume with the market of a big Russian region”. The company has all the motives to infiltrate in this market. “Competition is still low in Belarus beer market – experts say. - And “Baltika” is territorially neighboring Belarus, thus this will allow for low business -process building costs. Analysts conclude that “Belsolod” is the most attractive asset for “Baltika” at this moment.

In the mean time, analysts from IC “Metropol” don’t find Baltika’s union with “Belsolod” an optimal one. “This project is about to require large investments – they said. – Taking into account the fact that “Baltika” doesn’t own a production facility in Belarus, this project doesn’t look very expedient. Owning a malting facility is advantageous if only the malt can be supplied to its own breweries, subsequently allowing to brew cheaper beer because of a lower brewing cost in comparison to other brewers”. They claim that purchasing Belarusian malting facility’s shares is a reasonable choice only if “Baltika” has a plan of further purchasing a brewing facility in Belarus.

Hence, the opportunity of purchasing shares in “Krinitsa” can be interesting from an other point of view, given the possibility to supply malt to Baltika’s facilities located in the European Russian territory – delivery can be less costing. “Belarus is seen as a region, which will accommodate the company’s main malting facility. It is likely that this malting facility is needed to supply malt to Russia and Ukraine. “Baltika” will accomplish few in terms of conquering the Belarusian beer market by purchasing shares in “Krinitsa” which doesn’t allow for a controlling stake.

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