Danish brewer Carlsberg (CARLb.CO) expects Russia’s beer market to grow 3-5 percent in the medium term as the economy recovers and drinkers switch to beer from vodka, its CEO said on Thursday.

Carlsberg is the beer market leader in Russia, where it owns the best-selling Baltika brand, with a near 40 percent market share.

“We see a return to growth in 2011 after a couple of years of steep declines. We see growth of 3-5 percent over the next three to five years,” Jorgen Buhl Rasmussen told Reuters Insider television.

He said that Carlsberg should grow its market share in Russia over that period, and expected the company to slightly outpace the 3-5 percent market rate.

The last two years have been very difficult with the crisis and a significant beer tax increase. But this year there is growth to look for,” he said on the sidelines of the World Economic Forum in St Petersburg.

Carlsberg, the world’s fourth biggest brewer and owner of the brands Kronenbourg and San Miguel as well as Baltika, had earlier forecast 2-4 percent Russian market growth for 2011.

LOW ALCOHOL

Rasmussen said the best hope for brewers in Russia was that the government would be successful in its long-running mission to combat alcoholism, a problem he said could be solved with more beer drinking.

“Around 70 percent of all alcohol consumed in Russia is through vodka, so if the government is serious about reducing alcohol consumption it should lead to more beer drinking. Remember, beer is a low alcohol drink,” he said.

He said Russians were consuming an annual 80 liters of beer a head in 2008, in line with a western market, but this had dropped to 66 liters as the economic crisis and a 200 percent hike in beer taxes took their toll.

Carlsberg’s heartland in western markets is saturated, heightening the importance of emerging markets in eastern Europe and Asia.

“If you look across our markets, in general there is an improvement on 2010. It is still challenging in western Europe, in eastern Europe we are back to small growth, while Asia is growing fast,” he said.

When asked how to address the decline in western markets, he said “I am not sure we are able to.”