Turkey: Anadolu Efes organic beer sales up by 9.0% to 8.4 million hl in 1H2006

Anadolu Efes has released July 21 its sales volume figures for the period ended 30.06.2006. The brewery reported a total beer sales volume of 9.2 million hectoliters in 1H2006, up 19.4%. Organic sales have grown by 9.0% to 8.4 million hl. Total soft drink sales volume (including CCI & Efes Invest) stood at 194.2 million unit cases, up 34.9%. On proforma basis, sales volume saw a growth of 11.9%, from 173.6 million unit cases in 1H2005.

Anadolu Efes Biracilik ve Malt Sanayii A. (Anadolu Efes), listed in the Istanbul Stock Exchange, is the holding company of Efes Beverage Group’s beverage interests as well as an operating company, under which Turkey beer operations are managed. The Efes Beverage Group is composed of Anadolu Efes and its subsidiaries that produce and market beer, malt and soft drinks across a geography including Turkey, Russia, the CIS countries, Southeast Europe and the Middle East. The Group currently operates with 16 breweries, 6 malteries and 12 Coca-Cola bottling facilities in 11 countries and has an annual brewing capacity of around 33 million hl, malting capacity of 236,500 tons and Coca-Cola bottling capacity of 535 million unit cases per annum.

In spite of the exceptionally severe and long winter during 1Q2006, domestic sales volume increased by 2.3% in 1H2006 compared to 1H2005 and reached 3.4 million hl.

Including the export volume, which recorded a growth of 11.2% by reaching 0.3 million hl in 1H2006, the total sales volume of our Turkey beer operations increased to 3.7 million hl from 3.6 million hl in 1H2005, indicating a growth of 3.0% vs 1H2006.

The brewery has further expanded its brand portfolio in Turkish market through the introduction “Efes Ice”, first ice beer in Turkey.
Its international beer operations are conducted by Efes Breweries International N.V. (“EBI”), incorporated in the Netherlands and listed on the London Stock Exchange (IOB:EBID). EBI is a 70% subsidiary of Anadolu Efes and currently manages its brewing operations through 11 breweries and 4 malteries in 5 countries (including Romania).

In 1H2006 EBI’s total sales volume increased to 5.5 million hl, delivering 33.5% growth compared to the same period of previous year.

EBI acquired the Krasny Vostok Brewing Group (“KV Group”) in Russia, at the end of February 2006. Therefore excluding the sales volume of the KV Group for the March – June 2006 period, EBI’s organic sales volume growth was 14.0%, reaching 4.7 million hl.

In order to support the organic volume growth of the business in Russia, EBI completed the capacity increase of its Ufa brewery towards the end of 1H2006. Capacity of the Ufa brewery doubled to annual 4.0 million hectolitres. Together with the recently acquired 10.0 million hectolitres capacity of the KV Group, EBI’s capacity in Russia increased to 19.7 million hectolitres. Therefore EBI’s total capacity, including EBI’s proportionate share in the Romanian brewery, was 23.8 million hectolitres at the end of 1H2006.

In Russia, EBI’s organic sales volume growth was 12.4% in 1H2006 vs. 1H2005 at 3.1 million hectolitres, excluding the impact of the KV Group acquisition. EBI’s economy segment beer brand “Beliy Medved” was an important volume driver in the period and EBI’s flagship upper mainstream brand “Stary Melnik” also constituted a substantial portion of EBI’s sales volume in Russia. In addition, EBI’s lower mainstream brand “Sokol” and the licensed “Zlatopramen” brand both achieved substantial sales volume growth in 1H2006.

EBI’s total sales volume, including the KV Group brands, was up 38.9% and approximately 4.0 million hl of sales volume was generated in Russia in 1H2006. In addition to the mainstream brand “Solodov” as well as the economy brands “Krasny Vostok” and “Zhigulevskoe” which were added to EBI’s strong portfolio through the acquisition of the KV Group in 1H2006, EBI also started to brew, market and sell “Bavaria Premium”, a premium segment beer, and “Bavaria Malt”, a non-alcoholic beer, in Russia under licence from Bavaria N.V. effective April 26th, 2006.

EBI’s sales volume in Kazakhstan was 0.4 million hl in 1H2006, up by 28.3% vs 1H2005. “Karagandinskoe” remains to be the flagship brand of EBI in Kazakhstan and the sales volume growth of the “Efes Pilsener”, “Stary Melnik” and “Sokol” brands was ahead of EBI’s total sales volume growth in Kazakhstan in 1H2006.

In Moldova, EBI has a built-in smaller scale soft drinks business in addition to its brewing operations. Collective sales volumes of these businesses grew by 6.7% in 1H2006 reaching 0.5 million hl while only beer sales volume was up by 17.6%.

In May 2006, EBI announced its intention to sell all of its remaining shares in Interbrew Efes Brewery to InBev, EBI’s operating subsidiary in Romania that is organised as a 50% joint venture with InBev. A Share Sale Agreement to effect the sale is expected to be executed shortly. EBI consolidates this joint venture in Romania on a proportionate basis. EBI’s proportionate volumes in Romania was 0.4 million hectolitres in 1H2006.

Serbia was the only market where the sales volume was down in 1H2006 although EBI maintained its market position. Sales volume in Serbia was 0.2 million hectolitres 1H2006, representing a 14.5% decline vs. 1H2005.

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