KLIN, Russia (AP) -- The Klinsky Beer Factory has all the
attributes of a modern brewery: vast copper kettles, shiny,
stainless steel fermentation tanks, a bustling, automated bottling
line.
There's just one thing missing: a warehouse.
But Klinsky doesn't need a warehouse. It can't make beer fast
enough to fill one. Even though the brewery is expanding as fast as
it possibly can, a motley fleet of battered trucks is lined up
outside its brick walls every day to haul the beer off to market
the minute it is bottled.
What's happening in Klin, a sleepy, provincial town 55 miles
north of Moscow, is typical of what's happening throughout Russia.
Russians, especially younger people, are drinking more beer.
Breweries, scrambling to meet demand, are in a nearly unique
position in Russia.
They constitute a growth industry, fueled by increased
competition and better beer.
``Last year, the rate of growth of our brewery was 160
percent,'' said Olga Gulina, a spokeswoman for the Klinsky factory.
Some other Russian breweries did even better -- and this in a year
that saw Russia freefall into one of the deepest depressions ever
seen in an industrial economy.
There is talk, perhaps premature, of a generational shift from
vodka to beer. It's hard to conceive of anything that could wean
Russians off vodka. But just such a shift is occurring in Poland,
another vodka swilling country, and some economists predict it will
happen here too.
``It's a natural progression,'' said Hans Christian Jacobsen, a
director of agribusiness for the European Bank for Reconstruction
and Development, which has invested nearly $100 million in Russian
breweries. In emerging markets, Jacobsen said, consumers often
switch from drinking hard liquor to beer.
All this bubbling fermentation has drawn international beer
companies to Russia, where a battle is shaping up for shares of the
growing market.
A Scandinavian consortium has a jump on the competition with
Baltica, the country's best selling beer, which is brewed in St.
Petersburg and is the closest thing Russia has to a national brand.
SUN Interbrew, a recently formed alliance of Indian and Belgian
interests, is challenging Baltica's dominance through a chain of
regional breweries -- soon to include Klinsky -- and is laying plans
for a national brand of its own.
Other players include Turkey's Efes brewery, which just opened
its own factory in Moscow, and South Africa Breweries, which
recently bought a brewery in the city of Kaluga.
The cutthroat competition, which also includes Russian-owned
breweries such as Moscow's giant Ochakovo, is bringing something
new to Russian consumers: decent beer.
In the Soviet era, beer was unpasteurized, uninspiring and often
unavailable. It was usually terrible -- and that was if you were
lucky enough to find it.
It is no surprise, then, that Russians drink far less beer than
most Europeans or Americans. Per capita beer consumption is 5
gallons per year, compared to 22 gallons per year in the United
States and 34 gallons per year in Germany.
That could change as breweries expand their capacity and
continue to improve their quality. At their best, the new Russian
beers -- such as those produced by Siberia's Pikra brewery -- are as
good or better than most imports and cost a fraction of the price.
At Klinsky, most of the old Czech equipment has been scrapped in
favor of German and Belgian machinery. Ingredients are imported,
too -- malt from Finland, hops from Germany.
``Only the bottles are made in Russia,'' Gulina said. ``All the
rest is foreign.''
The beer isn't great yet. Klinsky's six styles lack the depth
and sophistication of great European beers, or the clean
consistency of American brews. But they aren't bad, either. And
they are popular.
Already, Klinsky has expanded its production from 106 million
gallons a year in the early 1990s to 290 million gallons a year
today. Now, with an infusion of money from SUN Interbrew, Klinsky
hopes to nearly triple its production over the next few years.
Klinsky has a small marketing department that has produced some
billboards and market displays, but the company hasn't done any
television advertising and doesn't plan any soon.
``The situation is such that we can't meet the demand,'' Gulina
explained. ``So to put our money into advertising makes no sense.''
