E-Malt.com News article: Russia: Heineken to suspend beer production at St. Petersburg-based Stepan Razin Brewery

Dutch brewing giant Heineken has stated that it has stopped the production of beer at Stepan Razin brewery in St. Petersburg, FoodBizIntel communicated on September 14th. All the brands of this company will be transferred to another production site. Instead of the production site the company is planning to establish a logistics center. Analysts believe that this move will help Heineken to reduce the cost of production of Heineken beer in a stagnant market.

Stepan Razin brewery is part of the Heineken group since July 2005. Currently its major regional brands are Kalinkin, Stepan Razin, Peter, Stepan Razin Admiralty, Stepan Razin Special, Stepan Razin Strong, as well as national brands Ohota and Three Bears. In addition, it produces a kvass brand named as Stepan Timofeyevich. According to official data currently Heineken holds a 13% share of the beer market of Russia, while the market share kvass "Stepan Timofeevich" in 14 major cities is 8%.

Most of analysts were skeptical about the prospects of Stepan Razin brewery in Heineken’s ownership, predicting the cease of production. In late 2008, Heineken ha started a reorganization of the site in a logistic terminal with the area of 6 thousand square meters. Now, this process was completed.

According to Heineken Russia, Stepan Razin brewery will be redeveloped in a complex distribution and warehouse logistics. The beer brands will not disappear. Stepan Razin and its product range will be produced under the "Heineken Brewery" branch which has enough capacity", - says Director of Public Relations of Heineken in Russia Anna Meleshina. Nevertheless, the company has cut about 130 people.

Stepan Timofeevich" kvass will no longer be produced.

Analysts believe that Heineken is using its original strategy to reduce costs and savings in production.

"Currently the Russian beer market is too saturated, and there will be no sales growth. Revenues will not grow, and the savings on logistics will increase the margin”.

The area of the warehouse complex will be no more than 10 thousand square meters.





16 September, 2009