EXCLUSIVE-Coors Light launched in Russia
* Molson Coors enters Russian market with Coors Light
* Aiming for double-digit share of premium market
* Sees int'l markets contributing to overall growth
NEW YORK, June 29 (Reuters) - Molson Coors Brewing Co (TAP.N) is entering Russia with its Coors Light beer, as it seeks a piece of that $21 billion market and a greater footprint abroad.
Molson introduced Coors Light earlier this month in grocery stores, convenience stores and select bars in the Moscow region, but plans to announce the move later on Tuesday. It hopes to ultimately sell Coors Light across the country.
The world's sixth-largest brewer, which also makes Molson Canadian, Carling and Blue Moon, is trying to diversify beyond its core markets of Canada, Britain and the United States. It recently announced deals involving Spain, Vietnam and China.
Russia may be best known for vodka, but it is the world's fourth largest beer market after China, the United States and Brazil. About 100 million hectoliters of beer were sold there last year, with the average person drinking about 71 liters, said Krishnan (Kandy) Anand, president of Molson Coors International.
"It is a market with great potential," Anand said. "Overall alcohol consumption in Russia is quite high, but beer's relative share of alcohol consumption is quite low ... If you look forward you will see that beer growth is likely to continue to be robust over time."
Molson will manage marketing and advertising of the Coors Light brand, while a local company, Moscow Brewing Co, will brew and distribute the beer.
That positions Coors Light as an imported brand that is brewed domestically -- meaning it will cost more than the mainstream domestic brands that make up about 70 percent of the market's overall volume, but less than the beers that are actually imported.
Anand declined to discuss specific sales targets, except to say Molson was aiming to capture at least a double-digit share of the premium segment of the Russian market within a few years.
That premium segment only makes up about 30 percent of the total market, whose dollar value Molson Coors estimated to be worth $21 billion.
BOOSTING SALES ABROAD Molson Coors had 2009 sales of $4.43 billion, with the vast majority of that coming from the mature markets of Canada, Britain and the United States. That has put it at a disadvantage when competing with global giants such as Anheuser-Busch InBev (ABI.BR) and SABMiller Plc (SAB.L).
Molson hired Anand last November to lead its international expansion. He previously worked for Coca-Cola Co (KO.N), leading its Philippines business.
Molson's international sales are currently very small, but Anand said the international growth strategy should impact the total company's growth within three to five years.
"Our goal is to keep the growth rate in the international business very high. As it gets more critical mass, it starts to move the needle," he said.
In five years, he expects a "significant" portion of Molson Coors' sales growth to come from international markets.
In its last big overseas investment, Molson bought Brazilian brewer Kaiser for $765 million in 2002, but after a tough time and following its 2005 merger with Coors, the brewer sold Kaiser to Mexico's FEMSA (FMSAUBD.MX) for a dramatically lower $68 million in 2006.
Its more recent moves involving Vietnam, Spain and Russia are smaller, calculated deals that involve local brewers and much less initial investment.
"That's the approach that's best-suited, given where we are in our evolution and where the markets are in their evolution," Anand said, characterizing those markets as being in the first phase of their development.
By contrast China -- which the company first entered in 2003 -- is in its second phase, Anand said, now that Molson agreed to buy a controlling interest in a joint venture with a Chinese brewer. [nN04217112]
Still, entering new markets can be difficult and Russia is expected to be no different. The government recently tripled its beer excise tax as of Jan. 1 in an effort to combat alcoholism. [nLDE65L0BW]
As a result, world No. 4 brewer Carlsberg (CARLb.CO), which controls about 40 percent of the Russian market with its Baltika unit, said earlier this month it expects Russian beer sales to shrink between 10 percent and 13 percent this year.
Anand said that, while the overall market is expected to decline, the premium segment should grow slightly.
The overall beer market in Russia had a compound annual growth rate of 2.9 percent from 2004 to 2009, according to Euromonitor International. The firm expects average growth to slow to about 0.7 percent a year from 2010 through 2014.
(Reporting by Martinne Geller; editing by Andre Grenon)
((Reuters Messaging: email@example.com;
((blogs.reuters.com/shop-talk/ for Shop Talk -- Reuters' retail and consumer blog)) Keywords: MOLSONCOORS/RUSSIA
(C) Reuters 2010. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN2880864
- Tweet this
- Share this
- Digg this
- Israel strikes house of Hamas Gaza leader, digs in for long fight |
- U.S. says Russia violated nuclear treaty, urges immediate talks
- Nigeria isolates hospital in Lagos as Obama briefed on Ebola outbreak
- Court orders Russia to pay $50 billion for seizing Yukos assets |
- Israel warns of long Gaza war as Palestinian fighters cross border |