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Belarus' beer market will not grow any time soon, CEO says

Belarus' beer market will not grow any time soon because beer prices will rise faster than consumer prices in general, Mikhail Chechanew, director general of Minsk-based brewery AAT Alivaryya, told reporters on Thursday.

The fast rise of beer prices relative to the prices of other consumer goods is the reason that the domestic beer market has shrunk and market trends are negative, Mr. Chechanyow said.

"The growth of the population's income determines the condition of any market," he said. "If something rises in price but does not stand out against the general background, the consumer has no problem buying this or that product. However, if the price growth is many times ahead of the inflation rate, this becomes noticeable."

Mr. Chechanyow expressed concern about plans to equalize the rates of excise tax on beer within the Common Economic Zone of Belarus, Kazakhstan and Russia. "To what extent will they be equalized?" he said. "Excise tax in Russia is currently 15 rubles per liter, or 4,200 Belarusian rubels [$0.49] at the current [exchange] rate. On January 1, excise tax in Belarus will be raised to 2,910 or 2,920 rubels. What will happen by the end of the year?"

Mr. Chechanyow noted that the rates of excise tax in Kazakhstan were much lower.

According to him, the share of excise tax in beer prices was about 20 percent in Belarus on October 1, up from six percent in August 2006.

Alivaryya Deputy Director General Nadzeya Dyshkavets echoed the view that Belarus' beer market had shrunk because of a rise in retail beer prices prompted by a higher rate of excise tax. People consider vodka a better deal in terms of alcohol content, Ms. Dyshkavets said. An additional problem for the brewing industry is that the number of people in the 18-25 age group, the main consumers of beer, decreases as the population ages, she said. //BelaPAN