DARK DAYS: Svyturys brewery, in Klaipeda, faces labor strikes and a proposed marketing ban on alcohol.
KLAIPEDA - Lithuania’s market leading beer, Carlsberg Group-owned Svyturys Alus, or translated into English, ‘Lighthouse Beer,’ could be looking toward foggy futures ahead.
With company labor strikes in the pipeline for this month, set to disrupt production at their brewery in the city of Klaipeda, coupled with a proposed national alcohol advertising ban liable to come into force next year, the Danish-run brand has been on the front foot to come up with solutions.
A high percentage shift of the beer production, from Klaipeda to Utena, an industrial town in the northeast of the nation, second home to the joint manufacturer of the now named Svyturys-Utenos Alus, has allegedly left production volumes at Klaipeda’s brewery half that of three years prior. Disgruntled workers were questioning the reasons.
“As soon as the decision was made to transfer a part of production to Utena Brewery, the financial performance of the company deteriorated. An obvious tendency of the decrease in the company’s earnings, proportionate to the volume of the transferred production, can be observed,” claimed a spokesman on the European Commission sponsored Web site, beerworkers.org.
Company strikes were meant to begin last month, but were postponed for 30 days by a ruling of a Klaipeda court on June 22. Demonstrations were thus expected to move into action later in July. It appeared unlikely salary cuts were the main impetus for the strikes to be held, due to reportedly reasonably figured wages.
“At this moment, I don’t see employees getting less than the average salary in Lithuania. They get 55 percent more than the average Lithuanian,” relayed development manager for the brewery, Dzuljeta Armoniene.
In a report recounting negotiations between the brewery worker’s union and officials, corporate affairs director for the company, Dainius Smailys, detailed, “No realistic compromise proposals from the trade unions were provided.”
It has been suggested that dissatisfaction with the Carlsberg Group ownership of the brewery could have played a part in the worker’s demonstrations.
“Beer production in Utena may be cheaper, but time has shown that consumers are prone to choose quality. The subsequent saving at the expense of quality will lead to the inevitable loss of the leading positions in the market,” predicted spokesman Raimondas, from beerworkers.org. “Such a policy impaired the high standing of the Carlsberg Group in Lithuania. The destruction of the oldest and most well-known brewery in Lithuania also contributed to that process,” he claimed.
While labor changes have affected staff on ground-level, management of Carlsberg were concerned about a different force poised to shake up the nation’s beer industry: the planned implementation of round-the-clock alcohol advertising bans projected for 2012.
The industry could risk becoming a “dark market,” warned Armoniene, if the proposed government restrictions come into play next year. The ban, which will act to remove intoxicant adverts from all national mass media, was accepted by Lithuanian Parliament in 2008 as an amendment to an Alcohol Control Law, allegedly to help curb alcohol-related violence.
Company spokespeople speculated, though, that Svyturys-Utenos could potentially survive the changes, due to an engrained public knowledge of the brand, though new ideas trying to surface within the market would struggle.
“It will be difficult to make new brands and to send them to market [within Lithuania]. But with old brands, I hope big changes won’t really affect them. I hope that it works in the consumer’s mind that it is a good product, at a good price. I hope, but who knows? We have never worked in a dark market before,” Armoniene declared.
On the flipside, marketing experts have suggested if the advertising ban was implemented, it could force companies to think outside the box, and utilize new creative strategies to gauge their demographic during a changing industry era.
“If the proposed alcohol advertising ban was successful, and alcohol use in the country was decreased, it would stimulate the industry to be more innovative. For example, by introducing new non-alcoholic drinks on to the market, which create less harm to public health,” considered the Coordinator of Alcohol Marketing Europe, Avalon de Bruijn.
“In other countries with more stringent alcohol advertising regulations, you can see how the alcohol industry is very creative in circumventing existing legislation. They try to reach the market by international advertising, such as over the Internet, or indirect marketing, such as by advertising non-alcoholic brands with similar names as the alcoholic brand,” she furthered.
Though, as the Carlsberg Group Web site, brandishing figures like “The average [annual] beer consumption in Lithuania was 87 liters per person,” it appeared the industry is safe for now.
But when vice president of the company, Sven Langeneckert, visited Lithuania recently to billet against the bans, according to Lithuanian daily newspaper Lietuvos Rytas, he mentioned Carlsberg would remove their stakes from the country if restrictions came into force.
Carlsberg Group denied these claims, with a media officer telling TBT, “The statement about leaving Lithuania was a misunderstanding between the Carlsberg brand-manager and journalists. We have no plans for leaving Lithuania.”
To prevent suffering losses should the advertising ban become reality within the country, Svyturys-Utenos seemed to be focused on steadily expanding the brand’s export reputation.
In May, the company picked up two industry-praised awards from the International Taste and Quality Institute (iTQi) in Brussels, for the standards of their beers Svyturys Baltijos and Adler Bock.
“These awards are more or less for export purposes. Usually big suppliers of the world, like Tesco or Aldi, look to get the best products, and this award shows it is of a high quality,” claimed Armoniene.
“I think it could increase exports. At the moment I know we export to 27 countries.”
Plans for entering world beer competitions in the future were being considered.