Slavutych to shutter a brewery?

Carlsberg Group Ukraine, owner of Slavutych (SLAV), might close one of its production plants in Ukraine because of pressure from the government in the form of higher excise taxes on beer, CEO Petr Chernishov said yesterday, according to local media reports. Carlsberg operates three plants in Ukraine in Kyiv, Zaporizhya and Lviv. Slavutych runs the plants in Zaporizhya and in Kyiv (the latter’s financials are not consolidated in the UAS accounts but reflected as investments on the balance sheet). Andriy Gostik: We do not think Carlsberg Group will realize its threat as it has been enjoying positive dynamics this year: in 1H09 it increased beer production by 1% yoy and reached a market share of 28.5%, becoming #2 in Ukraine. We regard the announcement more as a preemptive measure that the beer producer is taking to put pressure on the government in order to prevent a further raise in excise. The announcement might be followed by similar threats from other large beer producers (four players control over 95% of the domestic beer market).