Carlsberg CEO downplays threat of Russian PET beer bottle ban

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The head of Carlsberg has downplayed a proposed ban on PET beer bottles in Russia, adding that he thinks it is not likely to become law.
Russian deputy Viktor Zvagelsky introduced a bill earlier in the year that now includes a proposal to ban sales of PET beer bottles by January 1, 2013.

Ban not likely, says CEO

But Joergen Buhl Rasmussen, CEO at Carlsberg, which has a major presence in the Russian beer market, does not expect the proposal to make its way into law.

“We don’t think this is very likely to happen – banning PET for beer,” said the CEO during a conference call on Carlsberg’s first quarter results.

And even if it is implemented Rasmussen does not think a ban would have a major impact on Carlsberg – for whom PET packed beer only accounts for a small percentage of Russian profits. He even suggested that there could be a positive impact for Carlsberg.

“Consumers would start drinking from a different packaging type – cans or glass bottles – which would be positive in terms of premiumisation.”

Other beer measures

The proposal to ban PET beer bottles came in as an amendment to a bill introduced earlier in the year that includes other anti-alcohol measures that would impact the Russian beer market. These include restrictions on high strength beer and night time drinking.

But a company spokesperson told that the Russian team at Carlsberg is comfortable with the situation as it stands.

The spokesperson added that an update is expected next week as the bill makes its way through the Russian parliament.

While Carlsberg remains skeptical about the chances of the PET beer bottle ban making it into the final legislation, others think there is a strong possibility it could be implemented.

Nick Waite, head of market research at Pira, which has just published a study on PET in the beer market, said: “There is a good chance that the law will be passed.”

First quarter results

The Russian beer market has already been hit by a 200 per cent excise duty hike that came into force at the beginning of 2010. It led to significant destocking in the first quarter of last year that gave the Carlsberg 2011 Q1 figures, published this week, a significant comparative boost.

The company said like-for-like Eastern European sales, which include the Russian numbers, were up 28 per cent.

The distorting effect of the 2010 Russian comparison also gave a big boost to total Q1 sales which were up 14 per cent to DKK 12.5bn while operating profit grew 38 per cent to DKK 1bn.