SABMiller enters Ukraine, acquires Sarmat

SABMiller has entered the expanding yet competitive Ukrainian beer market in unusual fashion, acquiring some but not all of the assets of Sarmat, the country’s fourth-ranked brewing concern.

For an as yet to be disclosed price – the gross value of the assets are estimated at US $130 million, however – SABMiller adds the same name Sarmat brewery, a 2.9 million hectolitre plant located in Doenetsk in the east of the country; and three brands, Sarmat, Dnipro and Drive Max.

The deal also differs from the norm of wanting to be first or second in any market in that SABMiller enters the Ukraine at best in fourth place, behind SUN InBev Ukraine, Obolon and Baltic Beverages Holding. Sarmat as a whole also witnessed its market share eroding in recent years, down from 10% in 2006 to around 8% in ’07.

However, SABMiller is bullish on the Ukraine’s growth prospects, citing a four-year beer growth rate to 2006 of 14% per annum, according to research consultancy Plato Logic.

SABMiller Europe managing director Alan Clark observed, “The Ukrainian beer market has recorded exceptional expansion in recent years, driven by strong economic growth, but its still remains behind other (Central and Eastern European) countries in terms of per capita beer consumption.”

A SABMiller spokesman added that the company plans to return market share to growth by stabilising the existing brands and by bringing in new brands from, for example, the Russian portfolio. The business will have a fully independent management team and will report as part of SABMilller's Russian business.

The seller is System Capital Management, holding company for a Ukrainian conglomerate with assets in metals and mining, energy, banking and insurance, and telecommunications. Ukrainian businessman Rinat Akhmetov owns 90% of SCM.

Sarmat’s remaining breweries include the 600,000 hectolitre Poltapivo brewery, the 1.5mhl Lugansk brewery, a malthouse in Dnepropetrovsk, and a combined brewery/soft drink operation in Krym.

The transaction is subject to approval by the Ukrainian competition authorities.