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Russian Government to triple excise duty on Beer

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The Russian government approved a 2010 budget, which includes a plan to triple the excise duty on beer from the current 3 rubles (1 cent) last week. The changes are estimated to bring an extra 65.1 billion rubles ($2.2 billion) of revenues into government cash-flow budget in 2010. Not good news for Carlsberg. Russia is an important growth market for the world’s fourth biggest brewer, which had a market share of 38.3% in 2008 with its Baltika Breweries, Russias largest brewing company. The full impact this government’s move could have on Carlsberg isn’t clear yet. A Carlsberg spokesman was quoted as saying “We have not got any information on what proposal this will end up with, (and) which the finance minister will put forward so we have no comment.”. Carlsberg’s shares fell by 3.9% on Thursday, following the government’s proposals in the brewer’s key market.
However some analysts said, the proposed hike wasn’t as heavy as expected. “News on changes in Russian beer tax is less onerous than feared,” one of the analysts said in a research note. “We estimate that in 2010, this will increase the retail price of an average beer by 3.4%,” he added.

A Carlsberg spokesman said the company was still waiting for information on the final proposal to be sent to the Duma, Russia’a parliament. The proposals go to the Duma in September, so some Analysts assume that there is still time for lobbying to reduce the extent of the increase.

Baltika Brewery is the largest brewery in Eastern Europe. It is based in Saint Petersburg. Baltika Brewery started production in 1990. The majority of the company’s shares (85%) are owned by Baltic Beverages Holding (BBH), a subsidiary of the Carlsberg Group. Baltika has 18 breweries, eleven of them are located in Russia. Their combined output totals about 24 million hectoliters per year.

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Tuesday, September 26, 11:06 am

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