AB InBev Scales Back In Russia
Anheuser-Busch InBev (AB InBev) is set to close its third Russian brewery in less than two years as the country's beer market continues to disappoint. This move from AB InBev is in line with our moderate view on the Russian beer sector, which had been touted as a global outperformer last decade.
Including the plant it is to close, AB InBev operates seven breweries in Russia, after having nine in operation in 2012. Several years ago, breweries were clamouring to increase their exposure to the Russian market, seeing a niche in beer as lobbyists looked to clamp down on vodka consumption. At that time, not only was the consumption outlook in Russia considerably better than it is currently, but beer was barely taxed because it was considered a food staple.
As such, AB InBev, SABMiller and Carlsberg invested heavily into the BRIC economies of Brazil, Russia, India and China in the late 2000s. Russia, for example, now accounts for about 35% of Carlsberg's operating income. However, tax hikes and a soft consumer outlook have drastically changed our outlook on the Russian beer industry. In 2010, the industry was hit by a 200% tax hike, and further hikes were implemented at the start of 2013 along with certain regulations on points of sale and advertising. Around the time of this announcement, SABMiller transferred its Russian and Ukrainian assets to Anadolu Efes in exchange for a 24% stake of the latter.
|Only Moderate Growth Forecast|
|Russia - Per Capita Beer Sales & Total Market Value Growth|