Merger in prospect: brewing’s consolidation nears its end

Shareholders in Russian brewers Vena, Pikra and Yarpivo were expected to back a merger with brewing giant Baltika on Monday. Analysts said it marked the end of consolidation for Russia's beer sector, expecting rapid sales growth to slow.

Incorporation of the three regional breweries looked set to strengthen Baltika’s position as Russia’s leading beer producer. The new company would hold more than a third of Russia’s beer market, a sector worth more than $11 billion in annual sales. The national champion would have potential annual output just short of four billion litres. Analysts said the move would increase production of Baltika’s flagship brand, while some smaller brands could be dropped from the enlarged company.

Russia’s market is dominated by a group of mainly foreign players. These are Baltika, a joint venture between Danish Carlsberg and the UK’s Scottish and Newcastle, Belgium’s In Bev, Heineken from The Netherlands, and Efes, from Turkey. Foreign players have been flocking to Russia during a period of rapid sales growth as Western markets weakened. But while growth continues – forecast at between five and seven per cent this year – those watching the industry said it was set to slow in one of the world’s top five markets.