E-Malt.com News article: Kyrgyzstan: Craft beer slowly gaining consumers’ loyalty

The pump hand at Pinta, a draft-beer kiosk in central Bishkek, is having a busy summer. He estimates that the shop where he works, one in a chain of seven, has moved over five tons of beer this month, most of it produced by Kyrgyz brewers. Business is booming. “It is hot, so people want to drink beer,” Alibek, 25, says.

Pinta opened Kyrgyzstan’s first licensed draft-beer shop in 2008. Since then, copycat stores selling keg-drawn brews served in 1- or 2-liter take-away plastic bottles have mushroomed around the capital. Traditionally, many Kyrgyz will tell you, the former Soviet republic is a vodka-drinking country. But despite an ailing economy and the predominance of Russian lagers, locally brewed beers served as “razlivnoye” (“on tap”) are filling a growing niche, Eurasianet.org reported on August, 27.

Pinta employees estimate that local beers account for 80 percent of their sales. In the draft market, domestic brewers such as Arpa have asserted their dominance over household names like Baltika, a Russian beer giant. A 1-liter bottle of draft Arpa at Pinta costs 100 som (about $2) and a half-liter at a café runs 55-90 som. (A Baltika half-liter costs between 90 and 150 som.)

In the larger market for bottled beer sold in kiosks and supermarkets, the leading Kyrgyz labels Nashe Pivo (“Our Beer”) and Zhivoe (“Alive”) present a formidable challenge to the established Russian, Turkish and European imports, producers and retailers say, thanks to smart marketing and nationwide distribution.

Aibek Bolotbekov, director of the three-year-old Bishkek microbrewery Venskoye (“Viennese”) – which employs six people and produces a tart, cloudy, and popular brew – explains that draught beer stores like Pinta are essential to his business. “My beer is unfiltered and unpasteurized. Once brewed it lasts only two or three days, so we can’t bottle it; even selling it to restaurants is a risk,” Bolotbekov says, adding that such conditions also preclude opportunities to export.

Venskoye’s business model is typical of microbreweries dotted around the capital: the brewing equipment was imported from China, malt and barley arrive in bulk from Kazakhstan, and hops, a natural flavoring agent, is brought in from Germany. Once the brewing process is finished, Venskoye is kegged and distributed across Bishkek on the same day. (In Kyrgyzstan’s second-largest city, Osh, where Venskoye is not sold on tap, local microbrews such as Hoff and Akademia are available at some cafes, but bottled imports tend to dominate.)

Bolotbekov brews just over 2,000 liters of Venskoye per month in summer and says he’s enjoying a profitable season. But due to poor Eurasian grain harvests this year, the price of the brewing industry’s raw materials may rise, he fears. Moreover, Kyrgyzstan’s expected entry into the Moscow-led Customs Union could also present a dilemma to small local brewers.

“Although our [raw material] imports from within the union would be untaxed, this situation would benefit the bigger firms mostly,” Bolotbekov said. “Baltika would be able to enter the market at a lower price,” because the company would not have to pay any import tariffs and could pass those savings on to the consumer.

Arslan Karagulov, marketing chief at Kyrgyzstan’s biggest brewery, Abdysh-Ata – which makes Nashe Pivo and Zhivoe – calculates that per-capita beer consumption is “15 liters per person per year, maximum.” This is 10 liters less per capita than in neighboring Kazakhstan, he adds, and over a hundred liters short of annual personal consumption in the Czech Republic, which regularly tops indices of beer-drinking nations. Kyrgyzstan’s National Statistics Committee does not track beer consumption.

Karagulov, whose company employs around 1,000 people, maintains that local brewers are offering customers better variety and quality than ever before. Moreover, he says, the days when a Kyrgyz brewer begins exporting may not be far off. “We would like to export Nashe Pivo” – a cheap beer with high alcohol content, popular in rural areas – “to Kazakhstan, as there is a gap in the lower-price segment of the market there,” he says. The company would also like to export Zhivoe, which Karagulov describes as a “more expensive, European-style beer,” but he says doing so would test the willingness of Kazakh clients to pay more for something produced in Kyrgyzstan, a country some Kazakhs deride as less advanced than their own.

While brewers are worried about rising prices for raw materials and the long-term effects of the Customs Union, there is tentative evidence that demand may be growing sufficiently to absorb future price hikes. Arpa pushed prices up by 30-40 percent last summer, ostensibly to negate a pending alcohol tax. Yet barmen at several Bishkek beer gardens say customers are unshaken.

Overall, beer's share in Kyrgyzstan's market for alcoholic drinks is hard to calculate, as the whole sector remains murky. Karagulov would not discuss Abdysh-Ata’s revenues. An Arpa representative refused EurasiaNet.org’s requests for comment, citing a company policy not to speak to the press. And last month, an official from the Ministry of Economics and Anti-Monopoly Policy told journalists that more than half the country's alcohol production and sales take place off the books.

In the long-term, however, local brewers know they must do battle with vodka, the drink Azamat Akeneev, managing director of the Pinta chain, calls “our Soviet legacy.”

“Of course vodka is still the king here, especially among the older generation,” says Akeneev, who added a “beer restaurant” to the Pinta franchise in the summer of 2010. “But there is a tendency in society now towards drinking softer alcoholic drinks,” he told EurasiaNet.org. “People are coming round to beer.”


29 August, 2012