Russians develop taste for expensive spirits

Russians develop taste for expensive spirits

By Jenny Wiggins

Published: June 2 2008 01:50 | Last updated: June 2 2008 01:50

The spirit that has sustained Russians through thousands of years of freezing winters is starting to lose ground to the spirit that has sustained the Scots: Russia has become the biggest European market for Johnnie Walker Blue Label, the most expensive label of the world’s best-selling Scotch whisky.

Demand in Russia for alternative spirits to vodka – and for pricier alcoholic beverages in general – has been rising faster than anticipated, prompting Diageo, owner of Johnnie Walker, to plan importing more aged versions of its Talisker whisky, as well as Tanqueray 10 gin, from next year.

John O’Keeffe, managing director of Diageo, says: “We hadn’t anticipated [the demand] ... so we are bringing these in.” Diageo already sells its cheaper gin brand, Gordon’s, in the country.

Russia is a tough market for whisky producers. Vodka accounts for more than 90 per cent of the Russian spirits market and many Russians are not used to the taste of whisky or gin.

But drinks companies say people are turning to well-known western brands as they become wealthier, and see Russia as an increasingly important export market. In September, Russia became the first country in Europe to sell Diageo’s “King George V” edition of Johnnie Walker Blue Label, which sells for up to $1,000 (£506) per bottle.

“It is very much a status symbol to be seen to be drinking Johnnie Walker,” Mr O’Keeffe says. “People have been finding their wealth only recently so they want to show they’ve made it.”

He estimates Russian whisky sales are growing at between 30-40 per cent in Russia, and that there is more potential for Diageo in imported whisky than imported vodka.

Consumer groups eye middle class

Distillers and brewers are not the only groups devoting more attention to exporting and marketing their best brands to Russians; consumer goods companies such as Unilever are also making Russia a strategic priority due to its expanding middle class .

Antoine de Saint-Affrique, the group vice-president for Unilever’s central and eastern European business, says the group is putting its best technology into the country.

“We never hesitate to put state-of-the-art technology into Russia ... we don’t see Russia as a market in which we dump the product and take the money.”

The group’s technology for making tea bags can be found in its St Petersburg tea packing factory.

Unilever sells its international Lipton Yellow Label tea bag brand to Russians, who are big tea drinkers.

The company last year moved all its European production of deodorants to Russia and now exports sticks from the factory to more than 20 countries, including the UK, under brand names Brut, Lynx, Dove and Axe.

“Russian consumers feel they are in the home of vodka,” he said.

As evidence that people are choosing more expensive spirits, rival Pernod Ricard, which claims to have a 20 per cent share of the imported spirits market in Russia, says its average sales per litre rose from $12.60 to $27.50 during the past four years.

Net sales in Russia are rising 22 per cent annually, in spite of the high prices of alcohol in the country.

Whisky accounts for about 40 per cent of spirits imported into Russia, and gin makes up about 8 per cent. Diageo claims to be the market leader in whisky in Russia.

However, Pierre Pringuet, managing director of Pernod, believes imported vodkas also will appeal to Russians. His company sees Russia as an important market for its newly acquired Swedish vodka brand, Absolut, which sells about 1m litres annually in the country.

Mr Pringuet says Absolut will never compete with the cheaper vodka brands Russians drink with meals, but forecasts Absolut sales in Russia will grow in “double-digits” in forthcoming years as people use it in cocktails.

Mr Pringuet says beer is one of the biggest threats to local vodka producers as international brewers seek to wean people away from hard alcohol and by importing international brands as well as brewing beer locally.

SABMiller, which imports its Peroni brand to Russia and will soon import Grolsch, plans to increase its local brewing capacity for brands such as Miller Genuine Draft and Red’s by 50 per cent next year.

Jamie Wilson, SABMiller managing director in Russia, forecasts the beer market will grow in the “high single digits” this year.

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Shipping sheds its mantle of secrecy

By Robert Wright in London

Published: June 1 2008 20:23 | Last updated: June 1 2008 20:23

Companies in the secretive world of shipping are becoming more open – and some are even moving to embrace public listings, interviews with key industry decision-makers have revealed.

This trend, which comes after an unprecedented five-year long boom in the sector, partly reflects a growing need among shipowners to raise cash for investment and demonstrate their reliability to charterers.

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三菱重工、仏アレバに原発機器供給　安定調達へ協力拡大

　三菱重工業は原子力発電関連大手の仏アレバ向けに原発機器を供給する。まず原子炉容器を、アレバが建設する一部の原発向けに納入する。原発の新設計画が世界中で相次いでおり、機器・設備の安定調達が課題となっている。両社はすでに中型原子炉の開発や原発燃料分野で提携しているが、機器供給まで協業関係を広げ、受注拡大に備える。

　第1弾として、アレバがフィンランドに建設中の大型原発、オルキルオト3号機向けに三菱重工が原子炉容器を納入する。アレバが応札している南アフリカ共和国の原発など、今後のアレバの受注案件についても三菱重工は同機器の供給を検討する。

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Shell to buy Australian gas stake
By Miranda Maxwell Reuters - 1 hour 20 minutes ago

SYDNEY (Reuters) - Royal Dutch Shell said on Monday it will pay $739 million (374 million pounds) for an interest in Arrow Energy's coal seam gas projects, as competition heats up for Australia's vast coal seam gas assets, driving Arrow shares up by a fifth.

As exploration costs soar for offshore gas, energy firms struggling to secure access to conventional oil and gas projects are stepping up their search for new energy sources to feed roaring global demand.

Origin Energy , Australia's largest coal seam gas producer, last week rejected a $13 billion bid from BG Group , saying its coal seam gas reserves alone were worth over $15 billion.

Malaysian state oil company Petronas on Thursday paid up to $2.51 billion for a 40 percent stake in Australian energy firm Santos's Gladstone liquefied natural gas (LNG) project.

"These transactions tell us there is a high degree of confidence from major LNG players that the gas from coal seams will work and will make lots of money," said an energy analyst who declined to be identified because he does not specifically cover Arrow.

"For a company like Arrow, this is a significant injection of cash to fund its growth. That's what they wanted," he said.

Shares in Arrow jumped 20 percent to a record on news that Arrow and Shell would jointly develop projects to extract clean-burning natural gas from coal deposits in Australia, China, Indonesia, Vietnam and India.

Origin CEO Grant King has argued that using the Petronas/Santos deal as a benchmark, Origin's coal seam gas reserves, now estimated at 10,000 petajoules, alone would be worth more than A$16 billion (7.7 billion pounds), well above BG's offer.

Arrow said its A$776 million deal with Shell valued its proved and probable (2P) reserves at A$2.72 per gigajoule (GJ), or A$0.80 per GJ if using the largest estimate of the coal seam gas reserves. That compares with the Petronas/Santos deal values of A$4.91 and A$1.65 per GJ.

GOOD OUTCOME

Another analyst, who also declined to be identified, noted a fair value comparison should include contingent resources, which Arrow has not estimated.

"The value was important, but the strategic drivers were equally important for us," said Arrow CEO Nick Davies, adding the 2P valuation was comparable with a deal struck between Queensland Gas Company and BG Group.

"The deal announced today is just the start," Davies said.

Arrow has significant coal seam gas production facilities in the northeastern state of Queensland. It has four producing projects in the state and supplies gas for industrial users such as power stations.

Shell plans to acquire a 30 percent interest in Arrow's coal seam gas holdings in Queensland for A$644 million and pay up to A$132 million for a 10 percent stake in Arrow International, a wholly owned subsidiary of Arrow Energy which holds Arrow's international interests in coal seam gas opportunities.

The agreement also gives Shell a five-year option to acquire up to half of individual Arrow International projects, including activities in China. Under the deal, Shell can also negotiate the purchase of any LNG produced from the coal seam gas operations.

Arrow is also in a joint venture to build a proposed coal seam gas-fuelled LNG plant in Gladstone, also in Queensland.

The proposed $400 million plant, which plans to start producing by early 2011, will have an initial capacity of 1.3 million tonnes a year, with plans to double output later. That compares with two other 3-4 million metric tonne a year projects proposed by Santos and a Queensland Gas and BG venture.

By 5:20 a.m. British time, Arrow shares were up 15 percent at A$3.83.