Heineken Sees Sales Weakening

BloombergA Moscow bartender pouring a Heineken. Sales were up 15 percent last year.
Heineken, the largest Dutch brewer, said Friday that growth in its Russian beer sales would weaken this year as the market's expansion slows.

"There won't be double-digit growth this year," Viktor Pyatko, vice president of Heineken's local unit, told reporters after a news conference in Moscow. The company will aim to increase the amount of beer it sells in Russia "at least at the pace of the market or slightly better," he said.

Growth in the country's beer market will decelerate to 3 to 5 percent in coming years from 2007's 16 percent, Baltika Breweries, the largest local beer maker, has said. Foreign competitors, including InBev, the world's biggest brewer by sales, have flocked to the country as it expands for a 10th straight year, fueling incomes and spending.

Heineken's Russian sales advanced 15 percent to 15 million hectoliters last year. Drinkers bought more beer as the warmest Moscow winter since records began in 1879 pulled demand away from vodka.

The company will invest 112 million euros ($177 million) to 117 million euros in Russia this year, unchanged from 2007, Pyatko said. Around 60 million euros will go to quadruple capacity at a brewery in Nizhny Novgorod, and the company also will increase the capacity of its Yekaterinburg plant by about one-third and improve its brewery in Irkutsk.

He also said the Amsterdam-based brewer was moving to revive sales of Bochkaryov beer, one of its main local brands, which were unchanged last year.

Heineken will seek to improve profitability in Russia by cutting costs, including improving labor productivity, rather than raising prices, Pyatko added.

Heineken controlled 13 percent of the country's beer market in 2007, trailing Baltika's 38 percent share and InBev's 19 percent slice, according to research company Business Analytica.