Russia: Largest Vodka producer enters beer business

Russian largest vodka producer Tatspirtprom will enter the Russian beer market. The company, which is controlled by the Ministry of Land Assets of the semiautonomous Republic Tatarstan through its investment company Svyazinvestneftekhim, plans to spend about 4 billion Russian rubles ($69m) on a one million hectoliter brewery in Chistopol,  140 km south east of Tatarstan’s capital Kazan. The production will be operational in mid-2018.

In May this year Tatspirtprom commissioned the supply of German brewing equipment with Krones, the world market leader in brewing technology.  On September 5, General Director of Tatspirtprom Irek Minnakhmetov signed a 10 year license agreement with Prince Luitpold of Bavaria from König Ludwig International (KLI), for the production and sale of Bavarian beer under the brand names Kaltenberg and König Ludwig in Russia and Tatarstan. Aaccording to experts the deal is worth between 0.5 and 1.0 billion Russian rubles ($8.6m-$17.2m depending on the volumes sold.  KLI already entered similar agreements in Russian in 2004 with Sobol in Nowosibirsk and in 2007 with Ochakovo, the largest Russian controlled brewery headquartered in Moscow.

Besides the licensed brands, Tatspirtprom intends to produce at least 5-6 own beer brands. The brewery is palnning to conquer at least one third of the 3 million hectoliter beer market of Tatarstan. Some other smaller breweries as well as local market leader Efes in Kazan already operate breweries in the republic but experts believe that the optimistic plans of the vodka producer are not unrealistic. Anadolu Efes, which suffers from shrinking beer sales in Russia like most of the other foreign dominated major beer producers,announced in August to combine its Russian business with SunInBev, a subsidiary of international beer behemoth AB InBev (, 9.8.2017). Since 2007, when foreign companies dominated 92% of the Russian beer market, their market share has declined to 70% today.

Tatspirtprom was established in 1997 by the decision of the Government of the Republic of Tatarstan. The company is the largest alcohol company in Russia and ranked first in the national rating of vodka. In 2016, Tatspirtprom produced 1.24 million hectolitres of alcoholic products, including 1.15 million hectoliters of vodka, which gave it a 16% share in the Russian vodka market and 85% of the vodka market of the Republic of Tatarstan. It operates two spirit plants, four distilleries and one winery.

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