Cheers! How Western Sanctions Have Helped The Russians Develop Micro-Breweries & Craft Beers

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Op/Ed by Chris Devonshire-Ellis

Photos by Anastasia Prodchenko at the Bottleneck Beer Authority in St.Petersburg

Russia has long been a beer-drinking nation, the plentiful supply of wheats, malts and hops have always flourished in the country’s north European climate. State monopolized under Lenin, Russian beers however stagnated to some extent under communism. Today, the best known brand in Russia is Baltika, owned by Carlsberg, brewed in St. Petersburg, with a 38% domestic market share. The St. Petersburg production is the second largest brewery in Europe.

Although Baltika make some fine brews (your author is a fan of the No.8, with its 5% alcohol and hoppy, mature taste), Russia also imports many beers, from the light and heavy Germany lagers and pilsners, to the Belgium beers, and everything from the Trappist brews to the Cherry Kriek and other fruit beers. Sanctions however have made this, although far from impossible, just that more difficult. That has created an opportunity in Russia for domestic brewers. There is also a significant market to be had – Russia is the 6th largest beer consuming market in the world, guzzling over 8 million liters per annum.

Top Ten Beer Drinkers Of The World

Country Consumption (millions liters) Global Market Share %
China 40 21.5
United States 24 12.8
Brazil 12.5 6.7
Mexico 8.5 4.6
Germany 8.2 4.4
Russia 8 4.0
Japan 5 2.7
U.K. 4.4 2.4
Vietnam 4.3 2.3
Spain 4 2.2
(source: Kirin Beer) 

There is growth in the Russian market however, and European brewers, deprived of selling as easily to Russia as before, have also been looking at the market demographics. Although the Russian consumption is impressive, it is also somewhat seasonal. Russian beer drinking per capita is relatively low given its consumption levels, ranking just 32nd globally in consumption per capita at an average of 58.6 liters per annum. The highest beer drinkers per capita as the Czechs, at 143 liters each year, the Namibians at 108, and the Austrians at 106. (For the full chart click here)

Specialist canned beers on sale. All are Russian made

Specialist canned beers on sale. All are Russian made

This means that are is plenty of room for the Russian beer market to grow. Local Russian and European entrepreneurs have recognized this, and using last years 2018 World Cup Soccer Finals as a testing ground (we published an article on how to sell beer at the event here) foreign investors are piling in to establish micro-breweries and special limited edition brews for local consumers, often with funky imaginative designs and recipes.

New Russian craft bottled beers

New Russian craft bottled beers

The adage of sanctions not working is often true after markets adapt. The case in Russia’s point has now filtered down to Russia making its own beer from its own ingredients. While the 2018 World Cup offered a short term bonanza for imported beers, the task of distributing those to thirsty fans was taken up by Russian distributors. With seven out of the world’s top ten largest beer drinking nations participating, fans of those teams were asking about the local brews. Russian businesses heard that call, and the pictures tell their own story. The development trend will be to develop beers that Russians would like to drink in the long winter months – the consumption capacity is there, it just needs more local marketing and market savvy to get Russians more into the habit of beer as a winter drink. The opportunities are there. Davai Vipiem!

 

About Us

Russia Briefing is produced by Dezan Shira & Associates. The firm advises international businesses on investing, setting up businesses and administering them throughout the Eurasian region, including Russia, China, India & ASEAN, and maintains offices and partners in each of these countries and regions. For assistance with investing in Russia, or for Russian businesses wishing to invest in Asia, please contact Maria Kotova at maria.kotova@dezshira.com or visit us at www.dezshira.com.

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