Svyturys, probably Lithuania's best beer

KLAIPEDA - Svyturys, which means lighthouse, is certainly one of the beacons of success in Lithuania. Its history stretches back to 1784 when a Klaipeda merchant, J.W.Reinecke, felt it was time for the port to have its own local beer that could compete with better known brews from other regions.

The yeast used to brew the Svyturys beers is a German strain and the beers are based on Munich and Dortmund styles. Despite the turbulent history of the region passing from German to Russian hands and finally independence, the beers have remained virtually unchanged.

Even the sea eagle, still to be seen on the Svyturys emblem, originates from the time when it adorned the coat of arms of the Reinecke family.

Now a major business with an authorized capital of 18 million litas ($4.5 million) and 200 employees, the lighthouse symbol is well known to all Lithuanians, who bought over 56 million liters last year.

The modern brewery was restored after the war in 1946 and delivered barreled beer to pubs in the Klaipeda region. In 1950 the company was equipped with the first bottling line, which had to be replaced several times as demand began to exceed capacity.

In 1973 Svyturys became the first brewery in Lithuania to pasteurize its beer.

When the Soviet Union collapsed Svyturys was reorganized into a joint-stock company, with the majority of the shares being held by company employees. Reinvesting the company's profits for restructuring and development soon paid off as Svyturys became one of the most popular beers in Lithuania.

The growth of Svyturys has been impressive. From 1999 to 2000, sales increased by nearly 43 percent, turnover by 58 percent and its net profit rose by nearly 36 percent from 24.46 million litas to 33.23 million litas. This year sees the same impressive figures, with a reported 22.1 percent increase in sales for the first half of this year compared to the same period last year.

In 1998 the light Svyturys brand "extra" was given the accolade of "Lithuanian Product of the Year" in a competition arranged by Lithuanian industrialists, and in June 2000 the same brand was recognized internationally with a silver medal in one of the subcategories of the World Beer Cup.

Is there a secret ingredient to Svyturys? "No!" is the emphatic reply of Nick Brading, the company's technical director.

"The brews are made with 100 percent barley malt, of which we import 60 percent from EU; the remainder is locally produced. The main impact on beer flavor is water and yeast. Svyturys brewing water is drawn from a well about 2 kilometers from the brewery, treated by the municipality then pumped to the brewery. The brewery softens it for brewing because it is a hard water type."

The success of Svyturys soon attracted the interest of bigger players, and in the spring of 1999 the Danish company Carlsberg A/S acquired a controlling block of shares in Svyturys and now owns 58.1 percent of shares. Other major shareholders include a Danish investment fund with 20.6 percent of shares, and the European Bank for Reconstruction and Development with 19.9 percent.

Carlsberg was keen to get a foothold in the developing Eastern European market and Svyturys was a step in that direction. More recently, though, Carlsberg has merged with the Norwegian brewer Orkla, which has given Carlsberg controlling interest in a further 12 breweries across the former Soviet Union. These interests include brand names formerly seen as rivals in the Lithuanian market, such as Kalnapilis and Utenos, although the former of these is soon to be sold off following regulations by the monopolies commission

According to Tomas Kucinskas, general manger of Jungtinis Alaus Centras, the group which heads the merged companies in Lithuania, the reason for the success is simple: "Consumers have great opportunities to choose one or another sort of beer among the 200 smaller or bigger breweries in Lithuania. A stable high quality of the product is the most important factor for their choice," he said.

But success can bring its own dangers. The brewery, located for many years in the heart of the city, is running at maximum capacity and is unable to meet demand. If the brand name Svyturys is to survive the 21st century, a modern plant will have to be built in a more commercially viable location on the outskirts of the town. Plans to relocate have recently been put on hold while Carlsberg A/S comes to terms with its new acquisitions.