Heineken acquires CEBCO
today confirmed that it has acquired 100 per cent of the Russian
group Central European Brewing Company (CEBCO), giving it a
controlling stakes in two of Russia's leading brewery facilities.
CEBCO currently owns 95 per cent of the common voting shares and 78 per cent of the total issued shares of Shikhan Brewery in Sterlitamak and 100 per cent of Volga Brewery in Nizhny Novgorod.
Heineken said that the transaction would be paid for in cash, although it would not reveal the exact amount, stating that it wanted to protect CEBCO's interests. Further to this Heineken also said that the transaction had been completed and that it was now awaiting formal registration for the transfer of ownership.
The transaction means that Heineken will become the third largest player in the Russian beer market with volumes of 5.9 million hectolitres and a market share of more than 7 per cent, up from 4.5 per cent.
Russia is currently the world's fifth largest beer market and Heineken expects the Russian beer market to grow by 7 per cent to over 80 million hectolitres in 2004, a forecast shared by many analysts.
Jean François van Boxmeer, member of Heineken executive board said: "These acquisitions extend our presence and participation in one of the world's largest and rapidly growing beer markets. The Shikhan and the Volga Breweries offer us a better geographical spread of production facilities in the fastest growing regions in Russia. "
Heineken says that the acquisition of the Shikhan and the Volga Breweries fits in Heineken's growth strategy for Russia. The Shikhan Brewery is in Bashkortostan in the southeast Volga region and has a production capacity of 1.4 million hecolitres for the production of three local beer brands and soft drinks. The Volga Brewery is in Nizhny Novgrod, in the northwest of the Volga region. It has a production capacity of 0.8 million hecolitres, serving the local market with three beer brands. Heineken says that both breweries will be upgraded to increase production capacity further in an effort to meet rising demand.
Heineken has also been racing to increase its brewing capacity in Europe in an attempt to maintain its crown as Europe's leading beer brand. Currently Russian brewer Baltic Beverage Holdings is carving up a growing proportion of the market with its Baltika brand. As the number one selling beer brand in Russia it has now been launched in markets across western Europe in the space of the last year, helping to edge sales closer to Heineken's number one spot. As Heineken moves east with its expansion, Baltika is moving west, a situation that will be interesting to follow in the future.
However, with Heineken Brewery LLC in St. Petersburg currently growing sales volumes at 15-20 per cent per year, it appears that Heineken's newly acquired capacity should help fuel continued growth of its brand in this very important market.
A press spokesperson told CEE-FoodIndustry.com that Heineken intends to remain acquisitive in the Russian market for the forseeable future.
