INTERVIEW-ZYWIEC SEES NO BIG 97 NET RISE .
Steven Silber
WARSAW 1996-12-06
Polish brewer Zywiec 's 1996 profit slump may last into next year due in part to hefty depreciation charges , but recent high investment should help the firm defend its 10-percent market share , the firm 's chief executive said .
Company President Jean van Boxmeer told Reuters in an interview on Friday that the firm , whose net profit fell 77 percent in the first 10 months of 1996 despite a 30-percent rise in sales , might only post slightly better profits in 1997 before having a chance to make a more significant turnaround .
So far this year Zywiec , whose full name is Zaklady Piwowarskie w Zywcu SA , has netted six million zlotys on sales of 224 million zlotys .
It has produced 1.5 million hectolitres .
Van Boxmeer would not say how much higher 1997 profits or market share could be but said sales of leading Polish brewers should rise as the country 's young urban professionals gradually switch from vodka to beer .
" The perspective on growth is such that reasonably we can think that somewhere between 65 and 80 litres per year is certainly reachable , " van Boxmeer said on Polish per-capita beer consumption , currently around 40 litres .
He said the 65-80-litre level could be reached in the next ten years and make Poland , with its 40-million population , Europe 's third largest beer market after Germany and Britain .
Van Boxmeer said Poland 's top five brewers , which produce about 55 percent of the country 's beer , could all raise market share as some of the numerous small brewers fall to competition from the large brewers with foreign investors .
Zywiec is 31.8-percent owned by Heineken while Carlsberg has the same amount in Okocim .
Earlier this year South African Breweries Ltd ( SAB ) bought strategic stakes in the unlisted Lech and Tychy brewers , which together hold more than 20 percent of the market , and Australia 's Brewpole BV has a controlling stake in Poland 's larges t brewery , Elbrewery Company Ltd. ( EB ) .
Van Boxmeer said the tough competition had prevented Zywiec from raising prices in line with inflation , which had added to the pressure on the firm 's margins .
He said advertising costs would also increase in the fight for market share .
But he said the company 's investment of more than $ 100 million already this decade , largely in production , would help position it to compete with such competitors as brewers from the neighbouring Czech Republic .
Some analysts say cheaper but high-quality Czech imports could invade Poland once tariffs for CEFTA countries are lifted in 1998 , but van Boxmeer says such a threat might be exaggerated despite the Czech beer market 's overcapacity .
" I think Polish consumers in general are quite proud of their beers -- and I 'm speaking about all the brands -- and as we make good beers ...
I think that this fidelity to our beers is a factor which can limit the Czech beers , " he said .
Van Boxmeer said Zywiec had its eye on Okocim , which has said it would start producing Carlsberg beer next year , but that Zywiec 's potential production of Heineken was a medium-term possibility rather than a short-term one .
He said his firm would be better off concentrating on its leading brand , Zywiec Full Light , which accounts for 85 percent of sales and is the country 's largest-selling brand .
" You will not win the war of the Polish beer market with imported international brands , " van Boxmeer said , adding that Heineken would remain an up-market import in Poland .
Van Boxmeer also said Zywiec would be boosted by its recent shedding of soft drinks which only accounted for about three percent of the firm 's overall sales and for which 7.6 million zlotys in provisions had already been made .
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