Scottish & Newcastle sees Russian beer sales soar

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The Independent Online

Sales at Baltika, the Russian brewer which is jointly owned by Scottish & Newcastle and Carlsberg, increased by more than a third to almost $1bn (£535m) last year, as a brand redesign and a doubling in its marketing spend paid off.

Sales at Baltika, the Russian brewer which is jointly owned by Scottish & Newcastle and Carlsberg, increased by more than a third to almost $1bn (£535m) last year, as a brand redesign and a doubling in its marketing spend paid off.

Reporting its 2004 results yesterday, the brewer said net sales increased 35 per cent to $994m from $737m a year ago, while gross profits increased by 31 per cent to $445m. The fastest growth came in the second half of the year, following the new marketing campaign, which helped the group to increase its share of the Russian beer market to more than 26 per cent.

Across 2004, the company said it had grown at more than twice the speed of the overall Russian beer market.

Licensed sales of Carlsberg beers also increased sharply in 2004, up 129 per cent on the previous year. The company said it introduced Fosters, a brand licensed by S&N, to the Russian market for the first time in October.

Export net sales increased by about 32 per cent over the year, to account for some 6 per cent of total group sales.

Although its marketing costs doubled during 2004, the company said its overall spend was in line with the rest of the industry. It added: "The fact that the company continued to grow despite limitations imposed on advertisements by the state testifies to the strong and stable position of company brands."

The rebranding and launch of several new brands increased raw material expenditure by some 14.7 per cent per hectolitre of beer. "The well-organised system of distribution and a balanced pricing policy allowed us to maintain high interest of all distribution channels in promotion of company products," the company said in a statement.

"Baltika beer is sold in 97 per cent of retail outlets in the country, which further supports its image as the people's beer of Russia," the company said.

Baltika, Russia's largest brewer, is 79 per cent owned by Baltic Beverages Holdings, a joint venture between Carlsberg and Scottish & Newcastle. Last December, Baltika's president, Taimuraz Bolloev, who had worked with the company since its launch 15 years ago, unexpectedly stepped down. S&N and Carlsberg denied there had been any dispute, but declined to disclose the financial terms of Mr Bolloev's departure.

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