Turkish brewer to halt beer production in Moscow

ISTANBUL

Turkish brewer Anadolu Efes has announced that it will stop producing beer and yeast in its Moscow facilities and will move production to other parts of Russia by Jan. 1, 2014.

In a written statement issued yesterday to the Public Disclosure Platform (KAP), the company said the decision was made after the Russian beer market shrank by 20 percent over the last five years, and the capacity usage for brewers fell to around 60 percent.

Anadolu Efes said the move was expected to raise the company’s competitiveness and productivity in Russia.

In response to Russia’s serious alcohol problem, the Moscow authorities have recently imposed a series of tougher alcohol sale rules, banning the sale of beer from street stands as of Jan. 1, 2013. Beer was thus made legally equal to strong alcoholic drinks, as before this ban drinks with an alcohol content of lower than 5 percent were permitted for sale at street stands.

The ban on the sale of beer at street stands has been imposed at the federal level since the beginning of this year.

The Moscow authorities also introduced a ban on the nighttime sale of strong alcoholic drinks from 11.00 p.m. to 8:00 a.m. several days ago.

The production capacity of beer and yeast of the Moscow facilities of Anadolu Efes has been equal to the 15 percent and 26 percent of the Russian operations of EBI, which carries out the international operations of Anadolu Efes, respectively.

The Russian beer market is expected to decline at a rate of low-double digits in 2013, mainly due to the negative impact of regulatory changes, the pricing environment, and deceleration in economic growth, according to another note by the company released on Nov. 11.

In Turkey, retailers are also no longer permitted to sell alcoholic beverages between 10 p.m. and 6 a.m., and the sale of alcohol near schools and places of worship is also forbidden, as of Sept. 10, 2013.

Anadolu Efes expects the Turkish beer market to also decline at a rate of high-single digits, reflecting the expected impact of the changes in the regulatory environment and higher prices.