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. Last Updated: 07/27/2016

Heineken Set to Brew Bud Brand in Russia

LONDON -- Anheuser-Busch, the world's largest brewer, and Heineken formed a partnership to start selling beer in Russia under the Bud brand.

The companies have reached a licensing accord under which Heineken will brew, sell and distribute the Anheuser-Busch beer in Russia, according to a PR Newswire statement released Monday.

Brewing will start in the next few months at Heineken's brewery in St. Petersburg. Bud will be priced in line with competing beers.

"It benefits both companies," said Johan van den Hooven, an analyst at Delta Lloyd Securities in Amsterdam. "Heineken is ranked No. 3 already in Russia after Baltic Beverages and InBev, while Anheuser-Busch is nowhere in the top three. It's logical for them to aim to distribute their brand in Russia as well."

Russia's beer market has doubled since 1999 and will expand by 33 percent by 2010, according to estimates by UBS.

Dutch-based Heineken already brews Bud for St. Louis-based Anheuser-Busch in Italy and distributes the brand in Poland and the Canary Islands.

Heineken shares dropped 15 cents, or 0.5 percent, to 31.69 euros mid morning in Amsterdam. Anheuser-Busch's stock in Frankfurt climbed to the equivalent of $42.01, up 79 cents, or 1.9 percent, from the close Friday in New York Stock Exchange composite trading.

Veronique Schyns, a spokeswoman for Heineken, declined to give details about the exact timing of the rollout.

More information will be announced when Bud is available in the market, she said in an e-mail Monday.

Bud will be sold at "high-end" bars and restaurants in major cities, including Moscow and St. Petersburg, the statement said. It will also be available in off-trade outlets such as kiosks.

The beer will be sold in 330 milliliter and 500 milliliter bottles and 500 milliliter cans, and will be priced in line with competing brews, according to the statement.

Baltic Beverages Holding, controlled by Denmark's Carlsberg and Britain's Scottish & Newcastle, is the market leader in Russia with a share of about 36 percent. InBev's Sun Interbrew venture ranks second, according to van den Hooven. Heineken has put its market share in the country at more than 14 percent.

Heineken made four acquisitions in Russia last year and has said it sells a larger amount of beer in the country than anywhere else.

Anheuser-Busch is expanding overseas as its domestic sales decline. The company now makes about 16 percent of its sales by volume outside the United States, up from 12 percent a year ago. International beer volume rose 51 percent in 2005, the brewer said last month.