Baltika-Baku Suspends Production

Azerbaijan's leading brewing company Baltika-Baku announced the temporary suspension of its production from 15 August 2016, according to Turan.

"Recently, a hard situation has emerged in the Azerbaijani beer market: in 2015 the market volume decreased by 20% and over the first quarter of 2016 – by 35% compared to the same period last year, and this trend continues. This is primarily due to the macroeconomic situation in the country and the effects of the two devaluations of the national currency, which crucially affected the purchasing power of the population," the company explained the decision.

The company's business is also significantly influenced by legislative regulation. So, in the second quarter the water billing system was changed, which leads the company to increase the production costs by 500 000 AZN in 2016. Also, since September 1, 2016 a law will come into force, banning trafficking of excise goods for cash and meaning mandatory prepayment, which means significant difficulties for the company in selling its products.

“As a law-abiding company, which has the status of Tax Partner, the company Baltika-Baku supports the desire of the state to increase the transparency of payments and turnover of goods. However, in the current environment, the introduction of additional methods of regulation and restriction of the economic freedom of companies will have a detrimental impact on business development in the country and will, in particular, lead to drastic reduction in the scope of the turnover of beer,” said the beer producer.

After the suspension of the activity for two months, the production will be transferred to the idle mode, while retaining the shipment from the warehouses of the company. This measure, according to the company, will help minimize the production costs of the company and give a chance to support the profitability of the business in Azerbaijan at the end of 2016, and will also help avoid layoffs and retain the maximum number of jobs.

The company Baltika-Baku, being a part of one of the largest beer manufacturers worldwide, Carlsberg Group, and the leader of the brewing industry in Azerbaijan, with a market share of 75%, is one of the largest non-oil sector enterprises of Azerbaijan.

The brewery Baltika-Baku is located in the town of Khirdalan, 10 kilometers from the capital of Azerbaijan. The company is part of one of the world's largest beer manufacturers, Carlsberg Group, which acquired the plant in 2008. In May 2009 it was opened after reconstruction. The production capacity is 10 million deciliters a year. The company employs about 250 people and about 400 indirectly (distributors, agents and contractors). The annual contributions of Baltika-Baku into the state budget are about 20 million AZN (90 million AZN since the beginning of the activity). The total amount of investment in the development of the plant is 47 million AZN. The production of Baltika-Baku occupies more than 75% of the market of Azerbaijan (2015). The company produces popular brands of beer, such as Khirdalan, Tuborg, Baltika 7, Baltika 0, Baltika 9, Khirdalan Draft, Cooler, Afsana, and Zhigulevskoye Firmennoye.  -0-