Foaming at the Mouth | Business| Economy and finance news from a German perspective | DW | 18.03.2002
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Foaming at the Mouth

Russians now drink beer in greater volume than ever before, turning their vodka-drinking tradition upside down. Will the binge end with market hiccups and a hangover for producers? No, says a top Moscow investment bank.



Not all stereotypes are true, but the one about Russians drinking is.

President Vladimir Putin makes a big deal about his preference to pass on vodka, but most Russian men and not a few women down the clear liquor in impressive, sometime depressive, volumes.

The average Russian drinks about 14 litres of pure alcohol annually, the government reports. Once upon a time, that was almost all vodka. But now increasingly, it’s beer, according to a leading Moscow-based investment bank.

The world’s biggest beer drinking nations are the United States and Germany respectively, according to brewing industry reports, but Russia – trailing 29 other nations of the world – is catching up, lickety-split.

No time to hiccup

For five consecutive years, according to industry research by Troika Dialog bank, Russian beer consumption has risen by more than 20 percent annually. Vodka remains a standard throat balm for rich and poor, but the gradual growth of a low-income middle class with a bit of spending cash has helped beer sales rise.

A bottle of mass-produced lager can cost around $0.30. That’s not affordable for someone making the average salary of 1480 roubles ($49.40) per month, but for workers in the big cities it’s just within reach. That’s why it’s mainly a hit in St. Petersburg, where people drink more than 70 litres annually per capita, and Moscow, at just over 50 litres per capita. Out in eastern Siberia, it’s just 20 litres.

That means the potential for growth is huge, Troika Dialog reports, expecting "the overall Russian market to reach the 60 litre saturation point by 2006, which provides for average growth of 9 percent over the next five years."

Nazdarovya (Cheers)

The nation’s stubborn love for vodka, according to the report, will probably stop average beer consumption at that point. Yet it’s still enough to spark tough market competition.

Russia’s domestic beer market is fragmented, with over 90 breweries of notable size producing over 200 brands. But the dominant breweries are backed by heavy foreign investment.

The largest is St. Petersburg's Baltika, which controls 22 percent of the market and is 75 percent owned by Scandinavian beverage giant BBH. Then comes Sun Interbrew, based in the town of Klin near Moscow, which controls 15 percent of the Russian market, nearly a third of Ukraine’s. and is 34 percent-owned by Belgium’s Interbrew. Trailing in third place is Heineken, the Dutch brewer, claiming 5 percent of Russian sales.

Quite a few too many

Beer consumption has risen so quickly that the Health Ministry warned last year of a "deadly" epidemic of addiction sweeping the country. Russians, accustomed to much harder drinks, sometimes take beer as if it’s a soft drink, and for a while that’s reportedly how it was categorised by the state statistical bureau.

It’s hard to say, though, that lager is Russia’s great alcoholic killer. It is home-brewed vodka, not beer, that the Health Ministry blames for 22,000 deaths a year.

The president, it would seem, chooses his drink wisely.

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