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Breweries go under scrutiny

In case of inefficient work in Belarus private breweries will return to state control
By Vladimir Khromov

The capacity of the Belarusian beer market is estimated at 45-50 million decalitres. Belarusian breweries are now producing 69.1 million decalitres a year — up from 48.6 million.

Mr. Lukashenko sadly notes that the brewery branch lacks the efficiency he would desire. Seven years ago, representatives of some of the world’s most well-known beer companies desired to enter our market, investing their private capital in Belarus’ breweries, bringing major technical re-equipment. Practically, it made sense, and the country welcomed their input. However, not all investors have been able to consolidate their market position, with some failing to fulfil their promises. Most of these are no longer operational. Meanwhile, those who began to actively develop their production facilities continue to work in the country.

Around 80 percent of our breweries are currently held by private capital, with $300m spent on modernisation (including $30m from the state budget and $160m from enterprises’ own funds and those of private companies). Considerable loans have been given by Belarusian and foreign banks, with notable results and considerably increased capacities, as well as diversification of production. Nevertheless, only 60 percent of new manufacturing capacity is being used, while 30 percent of beer sold in Belarus remains imported.

Having admitted private investors into this profitable business, Belarus failed to set strict goals regarding the definition of ‘effective work’; accordingly, additional agreements are now being concluded with investors. These list obligations, including the necessity of manufacturing import-substitution brands. Some companies have continued to promote their own imports, which is clearly not to the benefit of the Belarusian balance of payments. Meanwhile, minimum prices are being set for imported beer, in order to avoid dumping.

Negotiations are planned with the largest brewing companies to ensure manufacture of the most popular brands of beer, and to guarantee that trading networks give preference to domestic beers. The President does not object to some initiatives but has refused to grant breweries additional preferences, noting that they are yet to exhaust their capacity and could work harder.
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