Market Analysis- Beer

Thousands of years ago, people discovered that by means of cereal fermentation they obtain a nourishing and tasteful drink, namely the beer. The mass beer production on the Romanian territory goes back to the beginning of the 19th century, when Johann de Gotha inaugurated a beer factory, in 1809, just outside of Bucharest. Very soon, the beer house became an institution and most of all, a meeting point for journalists, politicians or theatre people.

Over the past 10 years the brewing industry had a positive trend in terms of quality, diversity of brands and production. This evolution was possible thanks to the ambitious policies of foreign investors that led to an increased competition on the domestic market

Romanian beer is known in Central and Eastern Europe for its taste and very low price. Romanian law considers beer and wine to be foodstuffs and therefore they are not subject to the usual tariffs and restrictions imposed upon alcoholic beverages. As a result, there are over 65 major beer brands in Romania, and many small, local producers.

1. Market Area

Of the 125 small brewers that existed ten years ago in Romania, only 26 have left and the experts say the market is already settled, and the emergence of a new competitor is very unlikely. Only a global manufacturer can succeed, and only if he is willing to invest a large amount of money. One can say that the Romanian beer market is already consolidated, mature, highly competitive, a market where four of the top five global brewers are present.

However, when we speak about market area, we speak about the geographic zone containing the people who are likely to purchase a firm's goods or services. As a result, the consumption of that specific product or service differs.

In what concerns Romania, the beer market is shared between Heineken, Carlsberg Breweries A/S, through United Breweries Bereprod SRL (URBB) subsidiary, InBev and SAB Miller Plc, through Ursus Breweries SA, dominant players controlling about 80% of the total market, estimated at a volume of about 20 million hectoliters. Obviously, the four breweries cover all the eight development regions of Romania, regional divisions whose purpose was to assure a coordinate regional development as the country progressed towards accession to the European Union :

The North-East Development Region: Iaşi, Botoşani, Neamţ, Suceava, Bacău, Vaslui The West Development Region: Arad, Caraş-Severin, Hunedoara, Timiş The North-West Development Region: Bihor, Bistriţa-Năsăud, Cluj, Maramureş, Satu-Mare,

Sălaj The Central Development Region: Alba, Sibiu, Mureş, Harghita, Covasna, Braşov The South-East Development Region: Vrancea, Galaţi, Brăila, Tulcea, Buzău, Constanţa The South Development Region: Argeş, Dâmboviţa, Prahova, Ialomiţa, Călăraşi, Giurgiu,

Teleorman Bucharest – Ilfov The South-West Development Region: Mehedinţi, Gorj, Vâlcea, Olt, Dolj

2. Market Structure

If you ask an experienced marketer what will determine the success or failure of a specific

product ,they’ll often quote an age old industry rule: 70% audience, 20 % offer, 10% creativity.

Regarding the beer industry, by correctly targeting, and segmenting the customer database to ensure

that the right offer reaches the right people, the product have a 90% chance of success before they

even start work on the creative. The target market must be defined in terms of size, structure, growth

prospects, trends, and sales potential.

Along with the process of targeting, market segmentation is actually dividing the market into

groups of buyers, where each group sees the product differently. These groups are based on variables

such as age, gender family size, income, occupation, education, religion, race and nationality and as

you may expect, demographic segmentation variables are amongst the most popular bases for

segmenting customer groups.

In terms of beer consumption in Romania, obviously, beer became widespread, from pubs to

the finest clubs in big cities, differing only the brand and consumer typology. But the main question

still remains : “Who are the beer drinkers?”

After increasing strongly earlier in the review period, beer total volume sales declined for a

third consecutive year in 2011 due to the impact of the economic downturn and the austerity measures

taken by the government in order to reduce the budget deficit and consequent drop in consumer

disposable incomes. In addition, the area was unable to sustain the high growth recorded in earlier

years of the review period due to the fact that per capita beer consumption in Romania in 2008 was

already among the top ten highest rates in the world – a fact which is surprising when considering that

Romania is a traditional wine producer.

When it comes to his favorite type of beer, the preference is clear: pale ale, medium strength,

packaged in 0.5 liter glass container.

As expected, the variety of brands concerning beer has led to consumer segmentation into

categories by brands, price and taste. As a consequence, Gösser premium brands such as Heineken and

Gosser are addressed to a superior segment of consumers with the age between 25-45 years, with a

fairly neutral taste so as to please everyone. They have a higher price but the consumer is wealthier.

The average segment of consumers, where Silva and Ciuc fit with a pronounced hop flavor

and addressing only to those who prefer this taste and have some knowledge about beer though. They

have a lower price.

The inferior segment handle other brands: GoldenBrau, Bucegi, Gambrinus generally

consumed by youngsters in large enough quantities.

Finally, there comes Schlossgold, a non-alcoholic beer addressed by its unique characteristics,

to a very broad categories of consumers: regardless of sex, age, education or income, for those who

want to enjoy a beer but also to avoid the consequences of alcohol consumption.

The Beer Manufacturers Association statistics show that the biggest consumers of beer are

business people consuming an average 13.75 liters / person / year . Meanwhile, in the peasant

households four liters of beer are consumed per year ,and the employees also consume annually 8.5

liters of beer per person.

Same Beer Manufacturers Association data shows that 78.67% of the total population consume

beer, but not only men drink beer! Women are consumers of beer in greater number than men,

statistics showing that over 83% said they are consuming beer, almost six percent more than men.

On the other hand, significant differences are recorded among consumers of beer if we take

into consideration another segmentation variable: the age. According to this criterion, it appears that

most beer drinkers are aged between 18-44 years old. After that, their number decreases significantly

(61% against 37%).

In the warm season 43.3% of the Romanians are daily tasting this drink, while only 6.59% of

the population rarely consume beer in summer.

The top choices of types of beer shows that almost 70% of Romanians choose lager. It is

followed by the brown ale, with 14.24% and 1.6% alcohol free. Educated consumers of beer

appreciate at a rate of 66% the light beer, while those with average education at 73%.

The beer market has currently 125 brands and finds a growing preference for premium and

super premium products, compared with the low cost ones. Two thirds of those who drink beer are

married, and 60% of drinkers do not have children. Of all beer drinkers, 94% usually consume alcohol

beer while only 4% are non-alcoholic beer drinkers. Lager is a frequent option for 91% of the cases,

while the brown beer is consumed in a small percentage (6%).

Regarding the place where drinkers enjoy to consume beer, the statistics show that : 51% of

consumers drink bottled beer only at home, 9% prefer drinking beer somewhere else, and there are

still 40% for whom the place does not matter so much, drinking beer at home and elsewhere.

The type of package preferred by the households was the PET, covering almost 70% of the

purchased beer volume and the preferred gram weight was the 2 L one.

Analyzing the evolution of PET, we see that it has not registered explosive growth in the Romanians'

preferences, last year reaching a rate of 45.6% from 40.4% in 2006. Although a slight decline, glass

took also a significant growth, 40.5%.

Traditional trade continues to play a very important role for this category, more than 40% of

the households buying the beer in the kiosks. In 2008, the volume of beer purchased in this type of

store saw a slight decrease in favor of the hypermarkets. Over 8.5 million hectoliters were sold in

supermarkets and the rest in neighborhood pubs and shops .

In conclusion, what really matters is that the consumers will become increasingly sophisticated and

will require genuine products and better services.

3. Market capacity

Romanians love their beer, especially on a scorching summer’s day, but so far it looks like not even the torrid weather will help brewers defy the drop of recent years. The local beer market fell by 3.5 percent in 2010 and another 2 percent in the first quarter of 2011, forcing local brewers to adapt to the sober new conditions.

The beer became less and less a seasonal product which Romanians chose no matter the weather conditions because it was a 100% natural product and suitable for each situation of consumption.

In 2010, the unstable economic environment that affected the consumers and their habits has led to a decrease of 3.5% beer market over the previous year, registering a total of 17 million hl. Beer consumption per capita has followed the same decreasing trend, reaching a value of 78 liters, whilst

consumer preferences regarding the packaging of beer remained constant for PET - 49.3%, bottle-31,7%, can-16% and draft - 3%..

The main distribution channel of the beer remains the retail market. According to market research, through the retail market sales units, there are sold the four multinational beer brands, which represented 90.4% of the total beer sales between 2007 and 2008. Both in terms of volumes, as well as values, the main channel of retail distribution remains the one represented by the grocery store. Between July 2007 and August 2008, these locations experienced 41.2% of volumes sold throughout retail market. Large grocery stores had a sales rate during July 2007-August 2008 equal to 9.7% by volume component and 8.6% on the value. Kiosks and general stores have reached a volume of 13.6% of the market, while the value was of 12% of the total sales of beer. Hypermarkets have reached a holding of 11.8% of volume component and 9.5% on the value. Other types of stores have made 23.8% of sales volume of beer on the retail chain and 34.3% of the total values.

In 2008, the statistics showed that each Romanian had tasted one beer daily during European

Football Championship and so there were sold 1,92 mil hl of beer in June 2008, with 10% more than in the similar period of previous year, when they reached a volume of 1,73 mil hl. "European Football Championship was one of the premises of a raised beer consumption in this period, together with the good weather from the second part of the month.

In the first semester of 2008, the beer market reached 9,9 mil hl, while the members of "Brewers of Romania" Association had a sales volume of 7,9 mil hl. In the same period of 2007 the sales of Brewers of Romania members were of 7,3 mil hl beer, the increase being of 8%. Also, the CAN segment has registered the biggest growth, 25% more than 2007. Nevertheless, the PET segment maintains its leading position in consumer's preferences, with a share of 46.5%, followed by the bottle with a share of 37.5%.

2008 was also the year when the dynamics of the beer market and the steady increase in beer consumption per capita forced producers to reinvest a portion of revenues to increase production

capacity, to meet the evolution of demand and not to loose the market share. Thus, after entering the Romanian market, four Romanian Brewers Association's member companies have invested in production facilities 766 million Euros. An example of this is the investment of 50 million Euros for the development of the factory started in Timisoara by URSUS Breweries last year. Following this investment, plant capacity had increased by 200% and the company's total production capacity will reach 6.3 million hectoliters per year. They proved once again their commitment to build a strong and responsible beer market in our country. Helped by over 6700 direct employees, from the 12 breweries from all over the country, they contributed with 272 million Euros to the budget state.

As a result, sales of beer on the local market went up 6.7 percent in 2008 against 2007, up to 20.7 million hectoliters according to producers in the beer industry, quoting the National Statistics Institute. Romania is among the only seven European countries with a production of over 20 million hectoliters and among the first six with an annual consumption of over 95 liters per capita.

Sales achieved by the Brewers Association in Romania reached a volume of 15.3 million hectoliters, less than 4.4% compared to 2009, and investments have decreased, due to reduction in investment in the national economy as a whole, reaching an amount of 51 million euro, approximately 50% less than the previous year.

The contribution to the state’s budget through various taxes (VAT, excise duties, personal and social security contributions) of the members of the Association reached 270 million euro, up by 7 million euro in comparison with 2009, in the context of an adverse economic environment.

The Romanian brewers continue to focus their efforts to strengthen the beer industry reputation on the Romanian market. In the same time they respect the consumer interests and promote responsible and moderate consumption, investing in social responsibility programs, whether we talk about promoting a balanced life style or educating the drivers. . Furthermore, they continue to react with promptness to the needs of the Romanian consumer and they develop projects in time in order to adapt their production capacities.

4. Market dynamics

Volume of sales in 2006: ≈ 17.7 millions hl

Volume of sales in 2008: ≈ 20.2 millions hl

- , where:

o n- the sales volume in the year 2008;

o 1- the sales volume in 2006;

o n - the number of years taken into consideration;

R= 14.124

As we can see, the beer market has a small growth tendency since the volume of sales has increased during the period 2006-2008 and the average variation rhythm it is positive, this proving a very attractive market. With an annual growth rate of 4%, Romania is to become the second commodity market after Poland.

The analysts say that this increase is due to the relatively low level of taxes, significant improvement in the quality of beer, as a consequence of the investments made by brewers, and also to the professionalism and intensity of marketing activities.

5. Market Evolution

There is least one market where we are world champions - the beer market. The recipe for success in the beer market will be taken on other similar markets - milk, soft drinks or wine.

We should learn from brewers about production, marketing and market development. Consuming about 100 liters of beer per capita, we fit in the top 10 worldwide, while still twice drink less bottled water than the European average. The boom of the beer market lately shows that many similar markets will grow almost identical: production diversified and ever changing, professional marketing ideas backed by substantial advertising budget and an accelerated development of the market.

Firstly, the market development is surprising. This year, we talk of a market value estimated at 1.4 billion Euros. There is only the passion for beer and football or anything else? Or is it just because there are some skilful branding executives? The right answer is probably a little of each. Sales were driven by market segmentation too. The concept of PET was developed and also the huge market, being the fastest growing segment by far. If we compare it to other markets, such as wine or milk, we can see that growth rate is almost half. Not necessarily just the idea of change of the product itself, but the way it is presented publicly.

Here we go to the second feature, innovation in marketing. In the 1990s, there was a distinction between the two levels of quality and only a few brands, the Romanian beer bottles wrapped in brown labels and the western beer brought in aluminum cans. Now we have all the possible combinations and brands. Moreover, a local producer, with Romanian capital managed to become leader on the PET segment before selling to multinational business. The packaging, cartons, doses, bottles, plastic bottles are all solutions for customization and sales growth.

In 2008, the beer market reached 19.4 million hl, which means that practically in the last 12 years, had doubled. In 1996, it had a volume of 8.6 millions hl. And also for 2009, the anticipated growth was around 5% - very high if you are considering 2008 values that serve as a basis. Also, prices increased given the fact that we import about 80% of raw material and brewing. However, increasing the revenue generated by multinationals in Romania is sometimes greater than any increase in the Balkan region, excepting Romania.

6. Market conjuncture

The fluctuations registered by the demand and the offer from a certain period of time and the overall

tendencies expressed as the ratio between these fluctuations and their effects create the market

conjuncture. The evaluation of the market conjuncture from a certain period is done by analyzing

various indicators. Among these we have selected the most important economic indicators: the GDP, the

volume of wholesale production, the inflation rate, the unemployment rate and the exchange rate

Leu/Euro.

GDP

During the nineties Romania experienced two sharp recessions and recovered only after 2000. Since then, Romania recorded high GDP growth rates until 2008 showing the typical patterns of a catching up economy. After being hit by the financial crisis in early 2009 (the crisis arrived with some delay in Romania, yet the harder) Romania’s GDP dropped back below the level of 2007 and there are no signs for a quick recovery.

The GDP in 2008 was 513,175 miliarde lei , with 7.1% over the GDP of 2007.

Wholesale Production

Year Production Volume (kl)

Change vs. prior year

2007 1 942 200 11.1%

2008 2 077 400 7.0%

As seen from table above, the year 2008 has brought an increase in wholesale production of about 7.0%.

Inflation rate

2008 was not a good year in what concerns inflation. Almost all the economic growth was balanced by this inflation increase.

Unemployment rate

The unemployment rate according to the IBL (International Bureau of Labor) has reached a value of 4.10 % in 2008, as compared to the 6.10 % in 2007.

Over 6700 people are working directly in the 12 breweries of our members, located in Blaj, Braşov, Buzău, Cluj-Napoca, Constanţa, Craiova, Haţeg, Miercurea-Ciuc, Pantelimon, Ploieşti, Sebeş and Timişoara.

Exchange rate LEU/EURO

2005 2006 2007 2008 2009

By analyzing the previous factors, the following table can be created:

Highly unfavorable (-2)

Unfavorable (-1)

Neutral (0)

Favorable (+1)

Highly favorable (+2)

GDP +2

Wholesale production

+1

Inflation rate -2

Unemployment rate

-1

Exchange rate 0

Overall Market Conjuncture: 0

7. Demand and offer

According to the Association, in late 2008, the beer market in Romania recorded sales amounting to about 1.6 billion euro and 20.2 million hectoliters. Those figures represented a 4.1 percent growth compared to 2007, which ranked Romania among Europe’s top ten beer producers. The local branches of the afore-mentioned four international producers supplied as much as 85 percent of all beer sales in Romania over 2008. In 2008, the four sold a total of 16.4 million hectoliters of beer, by 8 percent more compared to the previous year, and reported a turnover of 900 million euro.

With respect to containers, beer in plastic bottles proved the most appealing to customers, accounting for 46.5 percent of all sales. Of all types of containers, canned beer recorded an upsurge, as sales grew by one quarter in 2008 compared to the previous year. The other two segments, namely bottled and draught beer, reported drops in sales of 37.5 per cent and 3 percent respectively. However, over quarter one of the current year, nation-wide beer consumption dropped by 10 percent compared to the same period of last year, from 9.9 million to 9 million hectoliters.

The main producers of beer in Romania are :

Part of the international Heineken Group, Heineken Romania was funded in 1998, under the initial name of Brau Union. Starting March 2007, it became Heineken Romania, change that also implied the natural adoption of the Heineken values and culture.

Starting 2000, Heineken Romania has a strong position on the Romanian beer market, with almost 30% market share (AC Nielsen, June 2008) after having bought Bere Mureş in 2008.

The brand portfolio of Heineken Romania is the widest on the Romanian market with 12 brands from all segments: Heineken, Zipfer (imported brand), Gosser, Schlossgold, Silva, Ciuc, Golden Brau, Neumarkt, Bucegi, Gambrinus, Harghita, Haţegana.

Heineken Romania has 5 breweries throughout Romania, in Constanţa, Craiova, Haţeg, Miercurea Ciuc and Targu Mureş. The Company has approximately 1500 employees.

In 2008, Heineken Romania invested over 50 million euros mainly in its breweries.In the next years the company will continue the investments in Romania.

InBev Romania is part of the multinational brewer Anheuser-Busch InBev, the leading global brewer and one of the world’s top five consumer products companies.

InBev leverages the collective strengths of its 120,000 employees based in operations in over 30 countries across the world. Anheuser-Busch InBev manages a portfolio of over 200 brands that includes global flagship brands Budweiser, Stella Artois and Beck’s, fast growing multicountry brands like Leffe and Hoegaarden, and strong “local jewels” such as Bergenbier, Bud Light, Brahma, Quilmes, Michelob, and Jupiler, among others.

Currently InBev Romania owns two breweries, in Ploiești and Blaj, has over 750 employees and a national distribution network. Having been present on the local market for 15 years, InBev Romania successfully produces the brands Stella Artois, Beck’s, Bergenbier, Lowenbrau and Noroc and imports the Belgian specialties Leffe and Hoegaarden.

Ursus Breweries, is a subsidiary of SABMiller plc, one of the world’s largest brewers. SABMiller plc has brewing interests and distribution agreements across six continents.

Ursus Breweries with the headquarter in Bucharest owns 4 breweries in Cluj-Napoca, Timișoara, Buzău and Brașov and employs over 1,500 people. URSUS Breweries brands are Peroni Nastro Azzurro, URSUS, Timişoreana, Ciucaş, Stejar Pilsner, Redd’s and Pilsner Urquell.

At present, the investment of SABMiller in Romania exceeds the amount of 250 million EURO, which reflects the company’s concern to meet the demands of the Romanian consumer and ensure the quality of its products by developing the Romanian brands.

The household beer consumption increased in the year that has just ended by more than 5% in volume. In 2008 as well, 8 out of 10 households bought the category at least once. Three big beer manufacturers dominated the household consumption: Heineken, InBev and Ursus Breweries. Similarly to 2007, they provided almost 70% of the total beer volume bought by the households in Romania. In 2008, the best bought beer brand was - by far- Timisoreana. 

Almost 30% of the household consumption in volume in 2008 was represented by Ursus Breweries and Azuga, increasing as compared to 2007. 

The type of package preferred by the households is the PET, covering almost 70% of the purchased beer volume. However, in 2008 a change occurred in the households’ preferences, because, as compared to 2007, they buy more can beer in disfavour of the bottled beer. The preferred gram weight is the 2 L one. 

Traditional trade continues to play a very important role for this category, more than 40% of the households buying the beer in the kiosks. In 2008,  the volume of beer purchased in this type of store saw a slight decrease in favor of the hypermarkets.  

In 2008, the households with incomes above average bought almost 30% of the beer volume. Moreover, almost 60% of the value of the purchased beer comes from the families with 3, 4 or 5 members, and approximately 20% from families whose main wage earner is 30-39 years old (their weight in the sample being of 15%). 

No international beer brand has made it into the exclusive club of those whose annual sales exceed 50 million euros, while domestic brands such as Timisoreana, Bergenbier, Golden Brau, Ursus and Burger have all overshot this mark, by as much as tens of millions of euros in some cases, reveals a survey conducted by Ziarul financiar.

 Whereas ten years ago these brands were selling just several hundred thousand hectoliters or even less, in late 2007 more than five domestic beer brands generated sales worth above one million hectolitres, which could translate into at least 50 million euros.

Timisoreana, the best-selling beer brand in Romania, produced in 2002 less than 10 pct of Ursus Breweries sales, while in late 2007 the same brand accounted for almost half of volumes sold by the local branch of SABMiller group. With sales volumes of 2.2 million hectoliters in 2007, Timisoreana sales could this year hit 130-150m euros, according to Ziarul Financiar estimates. In terms of volume, Timisoreana sales surged 43 pct in the last fiscal year, and by 51% in terms of value.  Bergenbier, one of Timisoreana’s main local rivals, generates almost half of InBev’s domestic sales, according to previous statements by Mihai Ghyka, the company’s former general manager.  As a result, out of a sales volume of 3.9 million hectoliters registered by InBev last year, Bergenbier sold over 1.9 million hectoliters.  The best-selling brand in Heineken Romania’s portfolio is Golden Brau, with turnover worth around 100m euros, according to Ziarul Financiar estimates. 

Starting this year, Heineken Romania’s portfolio will also include Sovata, Dracula and Neumarkt brands previously owned by Bere Mures. The production facilities owned by Bere Mures until the first half of this year had an annual capacity of 1.6 million hectoliters, and registered sales of 1.2 million hectoliters in 2007. After Neumarkt’s incorporation in Heineken Romania’s portfolio, Burger beer, part of the portfolio of European Drinks, owned by Micula brothers, is the only independent brand with large volumes that competes with multinationals’ brands.  Ursus is the best-selling brand on the on-premise segment both in terms of volume and value, according to a 2007 survey conducted by market research institute MEMRB. In overall retail Ursus held a 7-pct market share, followed by Ciucas, which accounted for 6 pct of the total domestic beer market.  The only domestic branch of a multinational that does not include any Romanian brand in its portfolio is URBB, controlled by Carlsberg Danish group. URBB, known domestically through the

Tuborg and Skol brands, has only international or regional brands positioned on the premium segment in its portfolio.  Last year the beer market exceeded 1.2 billion euros and reached a volume of 19.4 million hectoliters, up 9.6 pct from the previous year, when it hit a sales volume of 17.7 million hectoliters.  Its growth in 2007 was smaller than the advance registered in 2006 due to lower sales in the last quarter of 2007. This year, the main domestic brewers, Heineken Romania, Ursus Breweries, InBev Romania, European Drinks and URBB, expect the market to rise by approximately 5 pct.

In 2008 the Romanian beer market grew by around 10%, although Business Insights believes this rate of growth will not be sustained as the market reaches maturity over the next five years. By this time Romanian per head consumption is likely to be one of the highest in Europe.

One Romanian consumed an average of 93 liters of beer in 2008, 4 liters more than 2007. Romania is among the top 10 countries in Europe when it comes to beer consumption per capita.

Year 2006 2007 2008

Romania 81 89 93

8. Prices and tariffs

Beer sales by type of packaging : In 2008, sales on the CAN segment have grown 25%, Romanian consumers having a preference for this type of packaging.

Type of packaging

2006 2007 2008

PET* 40.4 45.6 46.5

Can* 8.7 10.4 13

Bottle* 46.2 40.5 37.5

Draught* 4.7 3.5 3

*% of the total beer sales

The taxes, representing VAT, excises and direct taxes for employees, which the members of the “Brewers of Romania” Association pay yearly to the Romanian state, have a great impact to the state budget.

Year 2006 2007 2008

BR`s Members

214 264 272

Figures expressed in million euros

Price level for 2008

Brand Qantity Price (RON)

HeinekenPET -Can 3.5 Bottle 3.8

Golden BrauPET 4Can 2.5Bottle 3

CiucasPET 4Can 2.5Bottle 3

Stella ArtoisPET -Can 5Bottle 5.5

Beck`sPET -Can 3Bottle 3.5

BergenbierPET 5Can 3.5Bottle 3.5

AlbacherPET 5.8Can 4Bottle 4.2

CarlsbergPET -Can 3.5Bottle 4

HolstenPET 5Can 3.5Bottle 4

TimisoreanaPET 5Can 2.5Bottle 3

9. Imports and exports

The strong position of multinational companies within Romania was an important determinant of the high level of domestic production and the continuing limited extent of imports overall. The opportunity open to multinationals operating in Romania to import their own premium brands manufactured elsewhere within the EU following the elimination of import taxes was not taken up, due to the substantial transportation costs involved, which would have had a significant impact on the final selling price. On the other hand, the low unit price of beer sold in large PET bottle packaging imported from Hungary and Bulgaria, which benefited from lower transportation costs, had a pronounced impact on the structure of imports during 2008. However, the strong position of those multinationals active locally was not seriously affected by the growth in imports, although a few regionally-based domestic producers struggled in the face of stronger competition from economy imported brands, especially as it was rumoured that these imports were not subject to excise duty.

Imports and exports of beer both experienced very dynamic growth in 2008; reaching about three times the figures in 2007. 2008 also represented an important change in the structure of imports, with the traditional countries of origin for premium imported brands, such as Germany, the Netherlands, Belgium, the Czech Republic and Austria, being outpaced by imports of economy varieties from Bulgaria and Hungary. These two countries together accounted for 68% of import volumes during 2008, although sales were limited to the neighbouring southern and western districts

of Romania respectively. Ireland was the only source of stout. Exports also nearly trebled during 2008, but remained limited compared with imports.

Romanians preponderantly consume brands from the internal beer production, the weight of imports being under 2,5%. As you can see in the following table, beer imports grew over 2008, from 180 thousand to 500 thousand hectoliters, as did exports, from 26 thousand in 2007 to 60 thousand hectoliters in 2008.

Year 2004 2005 2006 2007 2008

Imports* 0.059 0.028 0.032 0.18 0.5

Exports* 0.024 0.056 0.076 0.026 0.06

*million hlSource : National Institute of Statistics