Mugur Nicolae, brand manager of Ursus, believes it is very hard for new companies to enter the Romanian market now, with the big four players having a market share of more than 70 percent. At the same time, imported brands have already made their mark. This market segment increased to a 0.5 percent market share in the first quarter of 2007, studies of the market show.
“There are powerful brands on the Romanian market, with international awareness, which succeed in covering very well all the market segments. The entrance of a new brand would mean important marketing budgets,” Shachar Shaine, president of United Romanian Breweries Bereprod (URBB), explains. He is cautious though about the sensitiveness of the Romanian market to the price factor. “The danger is not represented by the big producers, which are already present in Romania, but by the small producers in the EU who succeed to produce and sell at smaller prices. Some of these, with a favorable geographical location – very close to our country – will want to enter the market,” said Shaine.
The production costs in Romania are mostly similar with the ones around the world and are facing the same increase; even so, price for beer in the country is smaller than the European average. The market is expected to continue on an increasing trend in terms of value. Last year the market increased by about 10 percent in volume compared with 2005, and more than 20 percent in value up to EUR 1.6 billion for retail prices, with the imports representing 0.5 percent of the market. An increase of 10 to 15 percent is expected this year as well.
Increased investments bring higher sales
Romanians are among the biggest consumers of beer, with an annual average per inhabitant of about 81 liters at the end of 2006, while the EU average reaches about 74 liters. The supremacy in this top is kept by the Czech Republic with about 160 liters per inhabitant bought yearly. “Central and Eastern European countries have a higher level of beer consumption that the rest of the EU countries in general, as in the latter the wine is more popular, especially in the Mediterranean countries,” Nicolae explains.
Shachar Shaine, with URBB, says the volume of beer consumption will increase to more than 80 liters per inhabitant, reaching and even surpassing the level of the European countries, as a consequence of a growing purchasing power, and the increasing popularity of PET-bottled beer.
Sales for the Heineken beer increased last year by a record 40 percent in volume, Heineken Romania announced last week. By and large, the former Brau-Union recently reborn as Heineken Romania posted a 24 percent increase in turnover. The company consolidated its position on the local market, attaining a market share of 26.7 percent, Edwin Botterman, president and CEO of Heineken Romania, announced at the beginning of the year. The company is holding onto the first position on the Romanian beer market for the seventh year in a row.
Heineken's sales in 2006 went up 20 percent in volume, corresponding to 4.3 million hectoliters. “For the first time in the past years, our company outgrew the market, which only went up 17-18 percent in 2006,” said Botterman, adding that the performance was a result of innovations and increased sales and marketing efforts.
He added that the company's investments in the next three years will amount to EUR 80 million. Since it first entered the local market in 1998, Heineken Romania invested more than EUR 165 million locally. Heineken Romania brands are: Heineken, Gosser, Schlossgold, Silva, Golden Brau, Bucegi and Ciuc.
The second player in terms of market share is Ursus Breweries, a subsidiary of SABMiller plc. It holds 24 percent of the market and has four production units in Cluj-Napoca, Timisoara, Buzau and Brasov. The company has invested last year about EUR 50 million for expanding its producing capabilities. This year the company will maintain the same trend with investments in improving its production level and promoting its brands. A good example for this is the recently launched 0.33 liters Twist-Off Ursus beer bottle. Ursus Breweries had an estimated EUR 185 million turnover in 2006 and expects an increase similar with the market level increase for the current year. Ursus Breweries brands are: Peroni Nastro Azzurro, Ursus, Timisoreana, Ciucas, Stejar and Pilsner Urquell.
URBB will also keep up with the market increase rhythm in volume in 2007. With EUR 100 million turnover in 2006, Shaine estimates the turnover will increase by 30 percent in the current year. This year the company will put more than EUR 20 million in expanding its production capacity, finishing the building of a new brewery, and the development of distribution and logistics. “Our main objective is to triple the turnover of the company by 2010,” Shaine said. URBB's brands are: Skol, Tuborg, Carlsberg, Holsten, Guinness and Kilkenny.
InBev Romania, the third largest player on the local beer market, is also registering increasing results, with 40 percent more sales in terms of volume in the first quarter of the year, compared with the same period of last year. InBev's results on the local market are in line with the sales of the other multinational companies, which reported a 37 percent increase in volume in the first quarter totalling 2.54 million hectolitres, according to data from the Romanian Brewers Association. The warm weather along with Romanians' taste for beer was responsible for the increase in the sales of the producer.
“Bergenbier Q-Pack and PET-bottled brands continue to be the growth drivers, registering a 73 percent increase on last year; however Beck's and Stella Artois are also aiding growth,” Mihai Ghyka, general manager of InBev Romania, said. In May of this year, Interbrew Romania and Interbrew Efes Brewery merged, creating InBev Romania, which has three production units in Ploiesti, Blaj and Baia Mare.
InBev Romania's brands are: Stella Artois, Bergenbier, Beck's, Noroc, Leffe, Hoegaarden and Lowenbrau.
While producers are focusing on the brand image and promotional campaigns, importers are striving to make the most of the niche segments. One of these importers is Depozitul de Vinuri (DDV), part of the RTC Group, the importer of the German Krombacher beers in Romania, including the mix segment, with Cab Lemon and Cab Cola beers. In 2006 the beer sales of the company were of EUR 300,000, while the estimations for 2007 are of EUR 450,000. Mass-market and Ho.Re.Ca segments are both targeted by the company through Krombacher.