The duelling beer biggies

Photo: SCANPIX

A. Le Coq is lord over South and West Estonia, Saku rules the North and the West.

Estonian ale market is highly concentrated with two top doers possessing four fifths of the market – merciless in mutual beer battle.

By brand loyalty, the Republic might be divided into A. Le Coq-Estonia and Saku-Estonia, consumers traditionally favouring the booze brewed by «own region boys». Even so, both companies claim such geographical distinctions are being blurred.

«Over time, the imaginary Northern-Southern consumer border line is fading away... Still somewhat felt, however,» says Saku Brewery boss Margus Kastein. «At the same time, the Estonian consumer is very innovative and does indeed try out product updates, as fresh favourites may thus be developed.»

A. Le Coq chief Tarmo Noop also confirms the existence of geographical favouritism – and its weakening nature. «15 years ago, we had five per cent market share around Tallinn, now 36,» said he.

Differing focus

Beer market must be among the most concentrated in Estonia, with the two biggies possessing 80 per cent of market share. High concentration, however, equals not lack of competition. Rather the opposite. The competition is fierce and, at times, it flares into public fights over who is first.

«Let us trust market research statistics,» says Mr Kastein. «According to market-research form ACNielsen, Saku Brewery was Estonia’s 2012 leader both in beer and cider retail – volumetric market share 39.6 and 45.7 per cent, respectively.»

«Saku is forgetting that we also sell Heineken,» parries Mr Noop. «Our volumes are larger.»

A. Le Coq’s parent company, the Finnish Olvi wrote in annual report for 2012 that A. Le Coq’s Estonian market share is 40 per cent in beer, 55 per cent in long drinks and 44 per cent in ciders. According to the reports, A. Le Coq’s beer sales rose by €1m to €41m, making for half of the company’s total turnover.

Saku Brewery’s last year’s beer sales were €43.4m, a whopping 39 per cent more than in 2011. At the moment, beer provides for almost two thirds of the total turnover of the brewery.

Mr Kastein says we must not forget that, with the entire product portfolio in mind, the companies are somewhat different: Saku mainly focussed at beer production, with other drinks less stressed.

«Even with the slight downward curve on Estonian beer market, the industries have found fresh outlets and channelled their production volumes into exports,» said he. «For 2013, Saku predicts all time record in production volumes,» he promised.

While the A. Le Coq turnover growth has, over the past three years, amounted to 5-10 per cent a year, Saku Brewery may boast of an increase ten percentage points bigger.

According to Mr Noop, a large chunk of Saku’s turnover growth has come from sales within the group i.e. subcontracting to Carlsberg – not yielding much profit. «Eliminating Saku’s intragroup sales, our growth is faster,» he said.

Owners abroad

As we know, both beer producers belong to foreign owners – A. Le Coq to the Finnish beverage maker Olvi, and Saku Brewery to Carlsberg.

For Olvi, A. Le Coq is a large and weighty company. Last year, Tartu granted about a quarter of Olvi’s total turnover and nearly 40 per cent of profits.

Carlsberg is world’s No 4 brewer, with last year’s turnover of €9bn. In that group, Saku is a pygmy with less than one per cent of the total turnover thereof.