Upside of Russian capitalism: beer Success: Canny Scandinavian investors have sold vodka-guzzling Russia on decent beer. Now it's possible to have a drink without getting drunk.


ST. PETERSBURG, Russia -- Russians may have lost stability, security, regular salaries, free medical care and a general feeling of global importance with the collapse of communism, but they've gained something in return -- beer.

The idea of beer that actually tastes good, an exotic concept in this storied land, has come riding in on the coattails of unrestrained free-market capitalism. And now the new Russian breweries can't turn the stuff out fast enough.

Sales doubled at the Vena Brewery here last year. They went up by 73 percent at Baltika, Russia's largest brewery, where the managers see no end in sight to the expansion.

And there's another little exotic idea trickling in along with the beer. It goes like this: Maybe you don't have to drink yourself under the table every time you sit down to have a drink. Maybe you can have a beer with friends, perhaps in a bar or restaurant, and simply relax.

Maybe, as unpatriotic as it sounds, there are sometimes a few occasions when it just might make more sense to drink a beer than to drink vodka.

"Beer is the social product," says Sergei Tseluiko, marketing manager at Vena.

The breweries are going after young urban adults -- who can afford the 80 cents it costs to buy a bottle of new Russian beer, who haven't yet wedded themselves to vodka, and whose memories haven't been permanently scarred by the way beer used to be here.

In fact, beer in Russia goes back at least a thousand years, far longer than vodka. It's just that in Soviet times there was only one variety available, called Zhigulyovskoye, and it was distressingly sour and cloudy. Sometimes there were things floating in it. Unlucky people who couldn't get their hands on vodka, which was often scarce, lined up at kiosks where beer was poured for them -- as long as they brought their own buckets. It was, in a word, wretched.

"But this beer is not bad," said Ilya Zhitkov, bartender at a new cafe here called The Idiot, as he plunked down a glass of amber draft Baltika. "I drink it myself. A bartender wouldn't drink a bad beer."

That's understated. Tseluiko is not being immodest when he says the difference between Soviet beer and new Russian beer is "absolutely day and night."

Quality beer got a modest start here as far back as 1992, when a Scandinavian company called Baltic Beverage Holdings took over a brewery in the industrial outskirts of St. Petersburg that had been under construction for 12 years. With new Western equipment replacing all the new but already dated Soviet equipment, Baltika was born.

The company sold 27 million liters its first year. This year, it expects to sell 450 million. Its share of the Russian market grew to 12.8 percent last year, for the first time outselling all imports combined.

The best thing about Baltika's growth, says Taimuraz Bolloyev, the general director, is that it mostly comes from people who didn't drink beer before, not from cutting into the competition.

"The quality means that those who once would never consider beer are now buying it," he says.

Vena, also with Scandinavian owners, occupies a big, red brick brewery that was built in 1872, and that passed the Soviet years as one of hundreds of factories nationwide making Zhigulyovskoye. With capital investments of about $30 million, it's still significantly smaller than Baltika but growing even more rapidly, with five brands -- one of which sells as an export in Finland.

Elsewhere in Russia, new breweries have formed with Indian ownership and as independents.

Beer production in Russia went into a steep decline in 1990, as vodka became more available and, under the new market economics, it no longer made sense to churn out rivers of Zhigulyovskoye if no one was going to buy it.

But in 1996, the growth of the new breweries was large enough to bring about an increase in overall consumption that is still gathering steam. Today, per-capita consumption is 18 liters, far below the average in other European countries -- a fact that fills Russian brewers with optimism.

"The capacity of the market is enormous," says Tseluiko, Vena's marketing manager. "There is vast potential for everybody."

The Vena and Baltika breweries are huge construction sites at the moment, as new lines and more capacity and better warehouses are added. Baltika's plant here is to become the largest brewery in Europe by next year.

Andrei Yefimov, an artist who works out of a rundown and incredibly atmospheric garret studio near the Fontanka River here, is one of Russia's new beer drinkers. Vodka has its place, to be sure -- when he's feeling under stress, or mortally tired. Vodka is for when he needs something quick and powerful. But beer, he has discovered, is for unwinding. If he wants to sit back and reflect on his paintings, he has a beer.

"I drink a beer," he says, "when I want to relax."

At The Idiot (named after the Dostoevski novel), beer outsells hard drinks by 20 percent to 30 percent on weekdays, less on weekends, Zhitkov says.

Russians are discovering the concept of stopping in at an inviting cafe or bar for a beer after work with friends -- and then continuing home, rather than going on a binge. There simply were no inviting bars or cafes here in the Soviet days, and the culture that's now arising with them is not one based on shots of vodka.

"Beer and vodka are quite different drinks," says Baltika's Bolloyev. "Beer makes you quiet. Strong drinks can cause an aggressive reaction in anybody."

Vodka, he points out, is distilled, as if in a chemistry lab.

"I personally believe vodka affects the body in such a way that irreversible processes are set in motion," he says darkly. "Beer has a natural basis, and it's produced by microbiological changes."

His mood brightens as he pats his washboard-flat stomach.

"The positive effects of beer outweigh the negative," he declares. "Though I doubt there are any negatives with beer."

Pub Date: 6/03/98

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