Bad feeling brews in beer industry

  • 2001-05-17
  • Mark Taylor
VILNIUS - Utenos Alus, the second largest brewery in Lithuania in terms of sales, announced on May 10 that it plans to produce Carlsberg beer for Lithuania and for export to Latvia and Estonia.

The brewery hopes to begin production at its Utena plant in the fall. Sample batches are due to come out this summer. Svyturys of Klaipeda is currently the only brewery producing Carlsberg beer in the Baltic states and the CIS.

"There is huge growth potential in the Baltic states," said Nick Brading, the technical director of beer marketing at Jungtinis Alaus Centras. "The technical ability is very high, the market is growing and the people are very easy to work with."

Carlsberg is the majority owner of Svyturys, Lithuania's leading brewery in terms of sales. Locally brewed Carlsberg was originally launched on the Lithuanian market last September by the Klaipeda brewery.

The Danish group became co-owner of Utenos Alus after a merger of brewing interests by Carlsberg and Norway's Orkla this spring. When asked about Carlsberg's opinion of its investment in Lithuania, Brading told The Baltic Times that the brewery was "very pleased."

However, not everyone is. Some smaller players in the Lithuanian beer industry are crying foul over the practices of Svyturys and Utenos.

Vilniaus Tauras, Ragutis and Gubernija are not happy about how the two larger breweries have been conducting business. These smaller breweries were the fourth, fifth and sixth largest breweries in terms of market share this year.

The general manager of Ragutis, Audrius Mikys, told The Baltic Times that an application was made to the Lithuanian Competition Council last September expressing the concerns of these breweries. He believes that the two big brewers are not competing fairly. Application was the first step in resolving these concerns.

Ragutis was recently pulled off the shelves of the EKO supermarket chain.

"We had a written agreement with them. We were actually planning more agreements on other issues," exclaimed Ragutis' general manager. "It's not logical to sign an agreement and then just cancel it," he said.

According to Vytautas Kava-liauskas, chief of the consumer goods department of the Lithuanian Competition Council, EKO gave quality concerns as their reason for pulling the plug on Ragutis. Asked about the concerns of the smaller breweries, Kavaliauskas replied that "the council is investigating complaints."

Some supermarkets, such as EKO, have approached brewers about the possibility of brewing store brand beer. Tomas Kucinskas, director of Jungtinis Alaus Centras, feels that this would be a good opportunity for smaller breweries.

"Store brands are getting more floor space while we are loosing it," he said.

He went on to explain that he felt that the concerns expressed by breweries such as Ragutis have not been proven.

According to Mikys, Ragutis did not want to produce store brand beer because its price would make it an unprofitable venture.

Both Brading and Kucinskas also expressed their regret over losing the Kalnapilis brewery and felt it would be a strong competitor to Svyturys and Utenos. Kalnapilis began operating independently on May 7 and is awaiting a buyer.

Last year, Lithuanians drank more beer than their Baltic neighbors. A total of 220 million liters of suds were consumed there, while 95.5 and 68.7 million liters were consumed in Latvia and Estonia, respectively.