AB InBev, the world’s largest brewer, is closing its brewery in Perm, Russia in the face of lower alcoholic consumption in the country. The closure is AB Inbev’s third in less than two years and will see the number of plants in Russia reduced to 6, down from 9 in 2012.
Tightened alcohol regulation leading to a decline in beer sales has been blamed for the latest closure. In recent years the Russian authorities have implemented tax increases, advertising restrictions and a ban on kiosk sales in attempt to curb levels of alcohol consumption.
Sales for Inbev in Russia fell by 13.6% in 2013, while the Russian alcohol market as a whole has dipped more than 25% since 2008. “In the context of a general decline in the market due to increased tax and administrative burden, strengthening legislative regulation, the company must act and take necessary measures to maintain its business in Russia,” InBev commented.
The closure of the facility in Perm comes on the back of the shutting of breweries in Kursk in 2012 and in Novocheboksarsk in 2013. Meanwhile AB InBev’s competitors are making similar strategic decisions in the face of excess capacity issues – Heineken’s subsidiary in Russia closed one brewery last year and has a second up for sale.
Source: Wall St Journal / Reuters