From high tech to beer

According to estimates, the Romanian beer market will be developing in the long term, one of its engines being the Romanians’ appetite for beer, which will soon match European levels (60-65 litres per inhabitant against 49-50 litres currently consumed), says Isaac Sheps, chairman of the United Romanian Breweries Bereprod (URBB), maker of Tuborg, Skol and Carlsberg brands in Romania.

Although the latest data point to a 5% decrease in beer consumption this year, URBB is the only company among the large beer producers having registered over 30% growth by August 1, 2001, as compared to the year-ago period. Business plans for the next two years are based on 5% annual market growth, while the Romanian beer consumption is expected to reach the European level after another two years.

Sheps bets on the continual shift of preferences and consumption from the “discount beer” to the “premium” beer, amid the increase of the population’s purchasing power and willingness to drink high quality beer.

Although the evolution of the premium beer segment was below expectations, as the main competitors on the market focused on the discount beer category, URBB bets on the international beer, focusing on a domestic premium beer-Skol, one licensed premium beer – Tuborg and a super-premium beer – Carlsberg.

This strategy triggers an increase of the market share from 6% up to 7.5%. “We cannot hold a larger share, as we are not present on a very large market segment and I do not think we will ever be. We want to maintain the same market share, maybe a little higher, but we do not want to lose our position. We appreciate our competitors, but we cannot stay still.”

According to Sheps, the general evolution of the beer market, namely the arrival of major investors on the market during a short time, should have been a lesson for the Government.

On such an attractive market, international producers have invested a lot of money (350 million dollars) so far in quality improvement, advertising, distribution and transport, leading to an output increase. At the same time, wine production and consumption have dropped, even if Romania has remarkable potential in this field.

No investor is willing to lose money, as no investment is made where potential profit is lacking: “We came here because there is plenty of potential, because Romanians want to drink beer, but do not have so much money, because the competition is tight – one investor cannot make his way in a monopoly, bi-poly or tri-poly, while there are more than 100 beer brands on the Romanian market now – and because there are professionals here.”