Setback for S&N as Russia curbs beer advertising

President Vladimir Putin has signed off a ban on beer advertising in Russia in a move that analysts warn could threaten the world's fastest-growing beer market.

President Vladimir Putin has signed off a ban on beer advertising in Russia in a move that analysts warn could threaten the world's fastest-growing beer market.

Scottish & Newcastle, Carlsberg, Heineken and Interbrew, the maker of Stella Artois and Beck's, are among the Western brewers to have invested heavily in Russia, spending millions on joint ventures and advertising campaigns to cash in on the boom in beer drinking. The nation is being persuaded to ditch its love of vodka for beer, which is sold as a soft drink.

However, the new rules passed this week to stem fears of an alcoholism epidemic will ban beer advertising on television between 7am and 10pm, and advertisements must not show that drinking beer can lead to social, sporting or personal success. There will also be a ban on using humans, animals or animated characters in advertising, and brewers will not be able to advertise at sporting and cultural events.

Scottish & Newcastle owns a 50 per cent stake in BBH, which brews Russia's biggest beer brand, Baltika. BBH, which is co-owned by Carlsberg, reported a 13 per cent increase in volumes in first six months of the year. It had planned to spend about €74m (£50m) this year and S&N said the forthcoming television ban would not cut its advertising budget. "The restrictions are quite harsh, but we will just switch our focus on to billboard and poster campaigns, as well as point of sale activities," a spokesman said.

S&N does, however, sponsor Russia's ice hockey league, using advertising hoardings that would feature in broadcasts during the banned hours. Negotiations on this issue are continuing with the Kremlin.

Baltika's rivals would feel an advertising ban more keenly. It controls about 32 per cent of the market, with Sun Interbrew closest behind with 17 per cent. The Belgium brewer recently bought out its local partner to take a 100 per cent stake in its Russian venture, and Heineken earlier this month bought two breweries to beef up its presence.

Nigel Popham, of Teather and Greenwood, said: "Although this ban won't help the overall market in Russia, it could be quite helpful for S&N. It will make life more difficult for Heineken and Interbrew, who are trying to take on Baltika's market share from a low awareness base."