Baltic still dominant in 2003

Related tags Cent United states dollar

Baltic Beverages Holding has revealed its full year 2003 and fourth
quarter results, showing the company has continued to maintain its
growth in the maturing beer market.

BBH, which is a 50/50 venture between the UK's Scottish and Newcastle​ and Denmark's Carlsberg​ group, highlighted that in 2003 beer production volumes rose 8 per cent to 31.35 million hecolitres compared to the previous year, while net sales jumped 13 per cent to $131.4 million. However results did not reflect so favourably when converted into euros, showing that the figures had dropped 6 per cent in view of the mounting strength of the currency.

Reflecting how established the key players have become in the market, BBH​'s share of the key Russian market grew by 0.4 per cent to 33 per cent, helping it to maintain its leading position. Sales volumes in Q4 were up 14 per cent, and sales up 27 per cent in US dollars and 6 per cent in euros.

Profits for the full year and Q4 were affected by currency and increased costs in the business. The company says that it expects these investments (two new breweries and major changes to Baltika's sales and distribution network) will strengthen results for 2004 and beyond.

Overall, the trend for the year saw both sales and production volumes increasing as the year went on, which was also reflected in an improved financial performance for the second half.

Whereas the Russian market has shown signs of stagnation, in Ukraine BBH made strong progress. Here its market share grew to 21.7 per cent, 1.3 per cent higher than in 2002. This meant that the brewer passed Obolon​ to became the number two player in the Ukrainian beer market. The company also said that the new brewery in Kiev, due to open in spring 2004, will ease capacity constraints and add momentum to this good performance.

In the Baltics, high levels of competitor activity in the low value PET sector led to a slight market share loss in the year - down 0.6 per cent to 44.1 per cent - but BBH still continues to be a strong market leader.

BBH's latest market, Kazakhstan, now has an established brand portfolio and distribution network and capable management team, enabling it to build on its current market share of 14 per cent. The brewer said that with the inclusion of unofficial imports of Baltika beer from Russia, that figure is closer to 21 per cent.

With regards to the company's outlook, Christian Ramm-Schmidt, BBH managing director, commented: "BBH's results show continued sales and volume development in 2003, demonstrating the underlying strengths of its businesses. Profits for the year were held back by increased investments in brewing and distribution infrastructure as well as the negative impact of currency.

"In addition to building our physical infrastructure for future growth, BBH has also made considerable progress in developing its management capabilities. "

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