Vojvodina was and it is one of the most developed economically region in the country. To Carlsberg it offered an opportunity to acquire very modern and appealing brewery with an extraordinary tradition. It also proved to be a good location for beer business
We spoke with Vladimir Vava director of Carlsberg about the opportunities of investing in Vojvodina, specifics of the beer market in Serbia and the market approach of the company in the county and the region.
What is it that makes Vojvodina a good place to invest from Carlsberg’s experience?
Well, in our case Vojvodina chose us back in 2003 as having a very modern and appealing brewery from one side and from the other with an extraordinary tradition back into 1892 when Lazar Dunđerski broke the ground in Čib, today’s Čelarevo. Certainly, for Carlsberg, powerfully linked with our founder J.C. Jacobsen was a unique opportunity to acquire more than a brewery, but a story and a real heritage with deep roots in Serbian history and culture. The story of J.C. Jacobsen and Dunđerski are very similar as both of the founders were following their dreams that eventually become reality. On the more pragmatic side Vojvodina was and it is one of the most developed economically region in the country, with Backa Palanka, the beautiful City laying on the banks of Danube being on Top 5 most developed by the GDP reporting city in Serbia. I believe that all 3 arguments had a significant role in choosing the right place to invest the 220m Euro for the last 14 years.
How much has Carlsberg invested in Serbia so far, and how much is the company contributing to the economic development of Vojvodina and Serbia, both directly and indirectly?
Approximately 70% of above-mentioned investments has been dedicated to Vojvodina region, primarily into production plants, packaging material and point of sale equipment. When we talk about our suppliers, Carlsberg Serbia is focused on choosing the domestic companies which produce ingredients and packaging for the beer industry, and this statement is supported by the fact that more than 40% of our total spend on these components goes to the local suppliers. A good example of the domestic partner is Maltinex, the malt company situated in Bačka Palanka. Some other examples are Vračar, Žitko Mlin, Žito Produkt, all three from Vojvodina. I would also mention the Ball Packaging, not from Vojvodina though, but our big local supplier of cans, from Belgrade. Carlsberg employs 478 people in Serbia and 72% of them are local residents, mostly from Čelarevo and Bačka Palanka. We paid a significant amount of 26 mio. Eur in taxes and contributions due to the state in the year 2016.
Considering the purchasing power of the Serbian population, how challenging of a market is Serbia for Carlsberg, and which consumer sub-segments are Carlsberg’s target group?
Indeed the cost of l liter of beer in Serbia is one of the lowest in Europe, however it is about the affordability or about how many beers one can be purchased from the average salary and this data is showing a very high cost related to the income. In this respect, based on the Nielsen data about 11% only of the beer market lays in Upper plus segment, 69% in Mainstream and the rest 20% in economy segment. The L/capita of consumption was in 2016 around 56l/head at the lowest end compared with other European countries but the ‘share of throat’ is very favorable for the beer (about 25% excluding hot beverages). In this context we are targeting all three segment (value for money, mainstream and upper +) trying to get the right balance between the volume and value by targeting the so called Demand Spaces, or different occasions when the beer is consumed rather than categorizing the consumers( e.g. Chill and unwind, Fueling the fun, Part of the group, etc). For each of these Demand Spaces we identify the beer brand to cover the specific need and close to the ‘heart of the consumer’. It is everything about putting our consumers in the center of all we do and understand his/her wants accurately.
How much is it possible to compensate for the insufficient demand on the domicile market with export?
Last year about 40% of the production in Čelarevo was designated to the export and definitely had has it’s positive sides but our focus will stay in increasing the manufacture for Serbia growing the volumes and re gaining the Market Share. To be clear, the demand is there as last year the total Serbian beer market decreased by low single digit 2% henceforth it is about us in reaching our consumers in the right place with right products and correct prices. Affordability remains though the ‘name of the game’ in Serbia and this is not the most contented place to play. I will continue to support heavily our big pride brand LAV as the synonym of our modern beer history and our true identification with our country.
What are your further plans in terms of improving Carlsberg Serbia’s operations?
My main objective is to increase the top line and to retain “my house in order” from the cost point of view. It is about keeping the right balance between cost and revenue and getting the grip on each detail in our operations. We support 478 families related to Carlsberg Serbia, and that is a very big responsibility so my utmost important the goal is to keep the jobs and eventually create more opportunities for employment in the years to come.
This year you celebrate 125 year of establishment. How did you mark this anniversary?
Indeed in April we have had our big event and we launched the monography dedicated to the life of our founder, Lazar Dundjerski and his mark to the Serbian economy and history in the same time. We also re-opened just for one day unfortunately the doors of his amazing summer house located in Čelarevo and invited many of our friends, consumers, officials, media and our workers in a festive environment for celebration. As part of the Carlsberg and Dunđerski Foundation even one of the relative of the founder, Nikola Tanurdžić, was present reiterating the solid link that exists between our company and the Dundjerski Family traditions. In the same time, we launched a limited edition of LAV with 125 logo on it and with the shape of our brewery in Čelarevo by this making serious ‘waves’ in the market.
In which way does Carlsberg cooperate with the local community and how do you pick projects that are priority in terms of investing?
— When we established the Carlsberg and Dunđerski Foundation in 2015, we defined 4 areas that we will focus on in our work: science and education, preservation of the local cultural heritage, sustainability and responsible alcohol consumption. So far, all our activities have been concentrated in Vojvodina region, primarily Bačka Palanka municipality, and for this 3 years we have organized a number of applications for the donations in specific areas, and made various partnerships with regional institutions. One of our most important partners is the Faculty of Technology from Novi Sad, whose students receive our scholarships for years now