Russian brewing giant Baltika Breweries stated that forced PET-limitation has had a negative impact on its half-year results for this year.
As per Baltika, the volume restrictions of more than 1.5 litres on production and selling, that came into effect this January has, led to decline by an estimated 5%.
While, there was a decline in the beer market, there was a 5.7% increase in volume sales growth of non-alcoholic beer. Increase in the sales of non-alcoholic beer is part of the government’s strategy to support decrease harmful consumption of alcohol within the population.
In response to PET restrictions that were in place, Baltika has come up with a new strategy by adopting to a new value-based approach to drive sales in the market, while some of its competitors adopted a volume-based approach.
The approach resulted in Baltika’s products being priced higher than its competitors, resulting in market share loss and decline in the volume.
But, the company claims that this value-based approach has played a key role in improving its profitability. Hence, Baltika’s market share declined, particularly within the downsized PET packaging formats amounting to 32.2% in volume.
Baltika’s exports, on the other hand have continued to show positive dynamics. In the first half of the year, its commercial export volume sales increased by 1%, compared to the previous year. Currently, it has a presence in more than 75 countries in the world, 43 of which, it is regarded as a unique Russian beer exporter.
Baltika Breweries president and Carlsberg Group Eastern Europe Region executive vice president Jacek Pastuszka said: “The main challenge for us and the entire Russian beer market in H1 2017 has become adopted last year legislative amendments that came into force in January. Forced downsizing of PET bottles along with the challenging consumer environment as well as cold spring and summer in parts of the country influenced Baltika Breweries sales much and caused our market share decrease.
“At the same time, we significantly improved the company's profitability due to a strong price/mix and strict cost control. We will continue to execute our plans, based on Carlsberg Group's strategy SAIL'22 and aimed at strengthening our position #1 on the Russian market by using our strong beer brands potential and developing our winning culture.”