BELARUS NEWS AND ANALYSIS

DATE:

22/12/2006

S&N's Russian arm buys Belarus brewer

MARTIN FLANAGAN CITY EDITOR

BALTIC Beverages Holding (BBH), the fast-growing east European brewer jointly owned by Scottish & Newcastle (S&N) and Carlsberg of Denmark, yesterday bought a share of a brewery in Belarus.

BBH said that it had bought a 30 per cent stake in privately held Belarussian brewer Olivaria for an undisclosed price.

The European Bank for Reconstruction and Development has been a major shareholder in Olivaria since 2005.

BBH said: "As part of the continuing development of the business, the current shareholders have been looking for an international partner. After the capital increase EBRD will have 21 per cent of the shares."

BBH, which is already active in Belarus via exports from its main Russian brewery, Baltika, said in a statement: "BBH believes that, with a growing economy and rising beer consumption, this market has strong future potential."

There were ten million people in Belarus and they each consumed an average of 33 litres of beer per year, the group said.

The S&N/Carlsberg joint venture's main market is Russia, where, via its Baltika brewery, it is the biggest player with a 35 per cent share of the market. BBH also has operations in the likes of Ukraine, Kazakhstan and Finland.

The group said that Olivaria has a market share in Belarus of 10 per cent. It has a brewing capacity of 400,000 hectolitres and 600 employees.

Olivaria Brewery was set up in 1864 and the brewery plans to increase capacity to 600,000 hectolitres in 2007.

BBH announced a near-third jump in first-half earnings in August, with reported earnings before interest and tax of 199 million (?135.7m) on sales up 18 per cent at 961m (?655.7m).

The second quarter was much stronger than the first as the temporary disruption from the integration of BBH's sales and distribution network in Russia eased.

BBH is currently in the process of merging four breweries in Russia under its market-leading group Baltika.

Scottish & Newcastle yesterday announced the appointment of Brian Wallace as non-executive director. Wallace, 52, is a former deputy group chief executive and group finance director of Hilton Group, the global hotels business. He is also currently senior independent non-executive director at Hays plc.

Sir Brian Stewart, S&N's chairman, said: "Brian Wallace has great knowledge of the hospitality sector and will bring a wealth of international and financial experience to S&N.

"I know that Brian's breadth of experience in both commercial and financial terms will be invaluable in the years ahead and I look forward to working with him."

Source:

http://business.scotsman.com/agriculture.cfm?id=1899352006