Baltika Breweries Announces Q1 2008 Results

St Petersburg, May 7 2008 - Today Baltika Breweries, the leader on the Russian beer market, announces its results for the first 3 months of 2008.

The growth in sales of the title brand Baltika as well as the licensed brands development facilitated further premiumization of the Company’s brand portfolio leading to the significant revenue growth in Q1 2008 (+13.3%).

EBIT margin dynamics resulted from the raw materials, transportation and energy costs growth, temporary depreciation and maintenance costs share increase in low season.

Within 2008 Baltika is planning to eliminate most of the negative external factors by further premiumization of brand portfolio, by optimization in logistics, by decreasing depreciation and other fixed costs share through starting up Novosibirsk brewery operations at the full production capacity as well as by the agricultural project expansion.

In Q1 2008, Baltika’s sales volume amounted to 9.0 million hectolitres (+2.5% compared to Q1 2007), of which 8.8 million hectolitres was beer, an increase of 2.7% year on year.



2. BALTIKA SALES GREW AHEAD OF THE MARKET

According to Company estimates, as been forecasted, the Russian beer market developed slowly, the growth amounted to 1.7%. Mainly this is explained by the tough comparables with the previous year high performance when the market was driven by regulatory changes to alcohol drinks and unseasonably mild weather.

Nevertheless Baltika grew ahead of the market and, according to Company estimates, increased its market share in Q1 2008 up to 38.1% (+0.6% to previous year).

In 3M 2008 the volume of export sales grew by +13.6% compared to the same period last year and amounted to 0.4 mln hl. With licensed sales in Ukraine and in the United Kingdom, the growth in sales abroad amounted to +20.1% compared to previous year.



3. PREMIUMISATION OF PORTFILIO HAS BEEN CONTINUED

The title brand Baltika strengthened significantly its №1 position in Russia. On the results of Q1 2008, the sales growth of Baltika brand amounted up to 21.8% (including the growth of Baltika №7 (+45%) and Baltika Cooler (+61%)). The share of Baltika brand in Q1 2008 grew by 1.7% and amounted 13.0% (Company’s estimate).

In Q1 2008 Baltika Breweries strengthened its leadership in the licensed segment, the Company’s share in the segment (packaged beer) amounted 28.3% (data of Business Analytica agency, February 2008).

Sales of Tuborg brand — brand №1 in the license segment — grew on the results of 1Q 2008 by 43%, the sort raised its market share by 2.6% up to 18.5% (data of Business Analytica agency, February 2008). Excellent dynamics was shown by the license brands Kronenbourg 1664 (+75%), Foster’s (+85%), Carlsberg (+21%).

High sales growth in Q1 2008 has been shown by the regional brands Don +26%, DV +39%, Uralsky Master +11%.

In Q1 2008 Baltika Breweries signed a license agreement with Asahi Breweries Ltd. for the production of Asahi Super Dry beer till 2012, thus widened the range of the license brands in its portfolio.

Having continued the development of the brand portfolio through innovations and occupying new consumer segments, the Company in 1Q 2008 prepared a new premium brand in Baltika range for the launch, which is announced today. The new brand Baltika LITE will developed fast in the segment of a light beer (3.5-4.5% alc.), which, due to the data of Business Analytica agency, has one of the highest rate for growth. Baltika LITE is packed in a 0.5 l bottle of green glass with label NLL (No Label Look) and a ring-pull cap, as well as in a can of 0.5l.

Anton Artemiev, President of Baltika Breweries: ‘Despite the pressure of unfavorable external factors in the beginning of the year, we continue successful development through innovations and focus on premium, expanding further efficiency programs.’

Baltika Breweries is the largest FMCG producer in Russia. Since 1996, it has been the leader on the Russian beer market. The Company comprises 11 breweries across all of Russia. It has a wide portfolio of brands and its employees number around 12,000 .