Ukraine: The beer market grew by 12% in 1H 2006 despite an annual 18% forecast

The Ukrainian beer market will allegedly defy even pessimistic forecasts of its annual progress. The reasons for this underperformance are mainly objective alongside with rather excessive interventions driven by the Ukrainian government, The Russian Brewers Union published October 30.

At the same time, one can notice an encouraging tendency among the beer drinkers, in particularly their propensity to more expensive beers which could positively reflect upon the sector’s financial results.

At the launch of the brewing season, brewers forecasted an annual 18% increment of the beer production. Meanwhile, for the first half of 2006, they saw production rose only by 12% (in 2005 the beer market rose 23%). “In our most optimistic vision, the market will grow by 14%, but the sector’s deceleration is already visible. We expect it will attain its saturation point in 2010. By this time, sales will increase but in a slowing progression,” SUN Interbrew’s head of sales and distribution service, Sergey Esicoff, said.

The Ukrainian government’s prospects to increase excise duties on beer production from UAH0.27 to UAH0.34 and to introduce these modifications into the 2007 State Budget low could also be seen as an inhibiting factor of the brewing sector. “We’ve already addressed the government with the proposition to set the excise duty on beer at UAH0.31 but we still do not know if these initiatives will be effective,” Obolon’s head of the public relations department, Oxana Pirojoc, said.

These factors are upping the sector‘s market value. Brewers believe that the beer market’s monetary capacity will ascend by 15-18%, more than US$2 billion. And even if the sector’s sales are mainly focused in the middle segment (UAH2-2.5 for a bottle), its share is steadily dropping back.

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