Vena Brewery Plans Expansion as Sales Jump 130%

The St. Petersburg-based Vena brewery said Wednesday its targeted high-end market segment is growing so rapidly that it is scrambling to increase capacity.

Vena managing director Barry Marshall said its sales soared by almost 130 percent to about 87.5 million liters in the first three quarters of this year.

The brewery is operating to capacity and is building new facilities to increase production, Marshall said at a news conference. The construction is partially funded by the EBRD, which is disbursing $27 million of a $100 million credit line this year. In the meantime, Vena, controlled by Carlsberg, has signed a contract with rival brewery Bravo to bottle some of Vena's beer.

The Russian beer market has been growing by more than 20 percent a year for the past three years, but analysts predict that the growth rate may plunge. However, Vena is forecasting a growth rate just slightly below last year's levels, with production expected to reach 6.3 billion liters this year compared to 5.5 billion liters last year.

The premium sector, which Vena targets with its main Nevskoye brand and Tuborg, is growing vis-?-vis the mainstream sector, analysts said. The premium sector is likely to reach 20 percent of the market by 2004 compared to an estimated 15 percent this year, Vena said, citing industry analysts.

The share of premium beer retail sales in urban areas in July and August grew to 22 percent from 16 percent of the total market, or by 34 percent year on year, according to the Business Analytica market research agency.

Vena is honing in on the Moscow market, where sales are expected to grow to 50 percent of overall sales from 23 percent last year and 19 percent in 1999, he said. Its share of the Moscow market grew to 5.3 percent last August from 1.9 percent in August 2000.

Marshall said the brewery was fighting the inclusion of beer in the list of alcoholic drinks, restrictions on advertisement and prohibitive taxes. A law on state regulation of the beer market is being discussed by the State Duma.