Decrease in Beer Sales Influenced by High Consumer Inflation

The local representative of the Carlsberg Group Baltika-Baku, the leader of the brewing industry in Azerbaijan, with a market share of over 75%, in the first quarter reduced its beer sales volume by 35% in comparison with the figures as of April 1 of the previous year.

According to the company, this is due to the approved changes to the Criminal Code of Azerbaijan, prohibiting wholesale sales of excisable goods for cash from January 1. By the Ministry of Taxes decision the law has been temporarily suspended from January 12, but the chain of sales of this industrial structure was restored only at the end of February, which was also reflected in the results of the company for the quarter: the volume of primary shipments of Baltika-Baku in the first quarter decreased by 27.9 % to April 1 of last year, while shipments in March rose by 6.8%, which was also promoted by the sale of a new product launched by the company - from March 1, a limited shipment of the flagship brand Khirdalan started, dedicated to the Novruz holiday and the European football championship among juniors in Azerbaijan.

Also, the industry and the demand for beer in the first quarter were affected by the macroeconomic situation, due to the devaluation of the manat. High consumer price inflation has reduced the purchasing power of the population, because consumers were saving their money by reducing the frequency of purchase of beer or refusal of non-core food products. In addition, the profitability depends not only on the macro-economic situation, but also a reasonable level of regulation of the industry. Here, a key role for the company is played by the value of the excise tax, as well as the minimum number of restrictions on sales and advertising.

According to the company, the state has met the producer, repealing business checks and beer production licensing. Also introduced and approved was the logical amendment of the possibility of the sale of beer to the end user for cash. Further strengthening of the permanent dialogue between business and the state will achieve optimum conditions for work and development of companies and, as a result, good for the state in the form of increased tax deductions from the non-oil sector. Baltika-Baku, in turn, intends to continue to develop business in Azerbaijan and to apply the best international practices for the production of the highest quality beer.

According to Baltika-Baku, the company has invested 47 million AZN in the development activity. Investments this year are aimed at improving product quality and production standards - they have purchased new laboratory equipment for better microbiological analyzes of raw materials and finished products, and carried out the entire repair of the existing equipment and production facilities. In addition, a significant amount of funds will be spent on the implementation of energy efficiency projects, as well as to improve safety in the workplace.

The brewery Baltika-Baku is located in the city of Khirdalan and 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 per year. The staff is about 250 people, plus about 400 distributors, agents, contractors and annual contributions to the budget of 20 million manat.

The company produces popular brands of beer such as Khirdalan, Tuborg, Baltika 7, Baltika 0, Baltika 9, Khirdalan Draft, Cooler, Afsana, and Zhiguli Brand. --17D-