Brazil shine, Russia gloom in focus for brewers

Brewers Anheuser-Busch InBev and Carlsberg are set to show widely differing fortunes on Wednesday, with the former profiting from a continuing boom in Brazil and the latter suffering in Russia.

AB InBev, maker of Budweiser and Stella Artois, is expected to report increased earnings for the third quarter as the world’s largest brewer persuades Brazilians to pay more for their beer and pushes through cost savings in the United States and Western Europe.

Carlsberg, the world No.4 and producer of Baltika and Tuborg, likely had lower operating profit in the three months to September due to tax-driven price hikes quelling Russian demand and more costly barley imports enforced by last year’s poor harvest there.

The year-on-year comparison will seem even worse because Russia was hit by a heatwave in summer 2010, the cause of the poor harvest but a firm boost for beer consumption.

The world’s top four brewers — including also SABMiller and Heineken — have all sought growth in emerging markets, while trying to persuade drinkers in stagnant or declining U.S. and European markets, to pay more.

Carlsberg sells beer in a wide range of Asian countries, including China and India, but they made up only 9 percent of operating profit last year.

Russian expansion was the great prize for Carlsberg when it and Heineken divided up the assets of Scottish & Newcastle in 2008.

However, the Russian market has still to live up to its potential. It was flat in 2008, shrank by some 10 percent in 2009 due to the global financial crisis and by a further 4 percent last year after a tripling of duty, leading to overall price rises of about a quarter.

Carlsberg replaced its Russian head two weeks ago.

By contrast, AB InBev’s experience of fellow BRIC country Brazil has been one of almost constant growth, the brewer increasing beer shipments by some 10 percent in 2009 and 2010.

From next year Brazilians should again be drinking more because of new breweries in northern Brazil and a minimum wage hike of some 14 percent.

Even with Brazilians drinking slightly less this year, partly because output is near full capacity, AB InBev has hiked prices sharply, boosting revenues.