INTERVIEW-Russia brewer lures exotica-loving foreigners

By Julie Tolkacheva

MOSCOW, Oct 22 (Reuters) – Russian brewer Baltika, the top beer
producer in a land better known for vodka, plans to add Iraq and Cuba
to its export map next year as it continues to attract new overseas
fans, Baltika’s exports head told Reuters.

“There are quite a lot of people who like to taste new brands,”
Baltika Director for Exports Dmitry Kistev said in a telephone
interview late on Thursday.

“They are attracted by the unusual link of ‘beer and Russia’,” Kistev
said of Baltika’s typical customer.

The St Petersburg-based company, jointly owned by Carslberg

and Scottish & Newcastle, plans to raise its export volumes to 180
million litres next year from just 41 million litres in 2001 when it
began shipping abroad.

“Initially, exports were just the acknowledgment of the quality of our
beer,” Kistev said. “But when Russian market growth started to slow in
2001, we had to look for new markets.”

In 2001, export volumes accounted for 1 percent of Baltika’s overall
sales, but the company hopes to raise that to 6.5 percent this year
and 9 percent in 2005.

The ultimate goal is to export 15-18 percent of production, Kistev
said.

EXOTIC COUNTRIES

Russia’s biggest beer exporter, which has recently started deliveries
to New Zealand, sells the amber liquid in 35 countries. It plans to
enter markets in Brazil, Cuba, India and Iraq next year.

“We think that military operations will continue next year,” he said
of Iraq, adding that Baltika hoped mainly to supply coalition forces
with its beer.

“It will be Baltika No. 9, our strongest beer with 8 percent alcohol
content. We already have orders, maybe deliveries will start even this
year.”

Baltika will also sell Baltika No.0, its alcohol-free beer, for the
local Iraqi population.

The United States — Baltika’s biggest market — should consume 1.5
million litres this year and double that next year.

“China should show a similar result next year,” Kistev said.

Brazil will drink 360,000 litres of Baltika beer in 2005.

The only market where Baltika faces major problems is ex-Soviet
Georgia, whose authorities jailed the head of Baltika’s local
distributor for 3 months on accusations that the company had not paid
excise charges. Baltika denies this.

“We have been forced to stop sales to Georgia,” Kistev said. Baltika
used to deliver beer to Armenia via Georgia, but will now have to
consider transportation through Iran, where Baltika also sells
alcohol-free beer.

Baltika also plans to launch production outside Russia, primarily in
the CIS countries.

“There are such plans and we are holding talks,” he said without
elaborating.

10/22/04 03:02 ET