Molson Coors (TAP) launched its Carling brand in Ukraine along with Obolon Company, a leading brewer in Ukraine. The famous brewing giant Molson Coors will jointly participate in marketing and distribution of Carling in Ukraine.
Carling, formerly known as Carling Black Label in the United Kingdom, is the best selling beer in the country. Obolon Company will brew and package Carling for the Ukraine market.
Obolon is one of the largest Ukrainian manufacturers of beer, soft drinks, low alcohol drinks, mineral water and is also the largest beer exporter. The corporation has its main plant in Kiev and nine enterprises in Ukraine. In 2010, the company increased its beer production by 3% compared to 2009.
The British Carling beer will be produced at Kiev-based plant Obolon. As reported by management at Molson Coors, production has already begun at Obolon plant from May 13, 2011. Carling beers will be available in Ukraine in 0.5 liter bottles, whereas in other countries it is produced in 0.33 liter bottles and 0.5 liter cans.
Carling will be available in 500ml bottles in grocery stores, bars and neighborhood stores across Ukraine beginning June 2011. Management also reported that Molson Coors plans to produce 20,000 hectoliters of Carling beer by the end of 2011.
Ukraine is the second largest beer market in Europe. The joint venture with Obolon and the strategy of introducing Carling in Ukraine will present an excellent opportunity for Molson Coors for spreading its wings to emerging markets. Molson Coors looks forward to utilizing the strong distribution network and knowledge of the Ukrainian Beer maker to reap benefits from the under-served markets of the region.
Ukraine’s beer industry has been growing at a rate of more than 8% (CAGR) for the past 5 years. The premium segment has been reportedly growing fastest as consumers trade up from mainstream brands. With a lower per capita consumption of beer, there is strong growth potential in this market.
Recommendation
We remain encouraged by the restructuring initiatives taken by the company to reduce overheads and boost profitability. The initiatives include closure of underperforming breweries and efforts to improve efficiencies in finance, administration and human resource activities.
However, the seasonal nature of business of Molson Coors and increased competition from Anheuser-Busch InBev (BUD) are concernsCurrently, Molson Coors has a Zacks #3 Rank implying a short-term Hold recommendation.
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