The new partition of Poland
But Okocim's impecunity is of little strategic significance on a market which has pretty much stabilised. Nowadays, say analysts, the main threat to Okocim comes not from rival predators, but from the government. If this country's singularly high excise taxes are maintained after May 1, Carlsberg, Okocim and SAB Miller, the three brewers which have recently partitioned 80 percent of Poland's market between them, will face new challenges from cheaper competition from across the border.
Since its sensational acquisition of Austrian brewery group BBAG last summer, global brewery Heineken has combined all its Central European operations with those of BBAG, under the name Brau Union AG. Consequently, the Żywiec group, as it absorbs Brau Union brands, is increasing its market share from around 31 percent to 35 percent, and has inched ahead of 2002 market leader SAB Miller-controlled Kompania Piwowarska, which controls 32.9 percent and whose results come out this month. Though, as Carlsberg press spokesperson Margarethe Skov points out, Okocim's current market share is incontestably up on 12 percent a couple of years ago, the domestic number three remains way behind its peers with just 14 percent.
Heineken, unlike Carlsberg, undoubtedly has the cash to shop further on the local market. Nevertheless, this may be the point at which the consolidation of the local beer market stops. For, quite apart from the fact that Żywiec may be too busy sorting out its merger anyway, there's almost nothing left to buy.
"You'd have to look at the small breweries that make up the rest of the market. If they have good brands then possibly Heineken might pick them up. Otherwise they'll probably just be gradually squeezed out of the market," says Frederic Gits, analyst at global ratings company Fitch Ratings.
According to independent analyst Bogna Sikorska, the only potential acquisition left is Perła Browary Lubelskie which, though it has only three precent of the national market, controls 30 percent of the market in the Lublin region.
"However, shareholder conflict makes it unlikely that Perła could be picked up by any of the big three," she says.
Apart from slowly slurping up the 20 percent of the market that remains fragmented, breweries expect to benefit from growing beer consumption. Domestic consumption is already approaching European norms whereas, as Frederic Gits points out, "In Russia or Ukraine, growth has only recently slowed down from levels of 20 percent a year."
But with growth now at about eight percent Poland is, for the moment, still an expanding market, and Okocim seems to be picking up growth just as well as its rivals. In 2003, sales income increased by 8.7 percent, putting Okocim pretty much on a level, in terms of organic growth, with both Żywiec and Kompania Piwowarska, which announced domestic sales increases for 2003 of nine percent and 8.2 percent respectively.
The key issues in the beer market now, say analysts, will be cost cutting on operations. And it's precisely here that Okocim, as a distant number three, could find itself somewhat more challenged than its biggest competitors. According to analysts at Fitch Ratings, Carlsberg's operations, throughout Europe, are handicapped by over-spread.
"Carlsberg is spread too thin," says Fitch's Gits, "They're present in far too many countries where they're not number one."
In his view, this is a significant handicap in the beer business, where there are no international economies of scale, and where marketing strategies vary from country to country. "It's much more cost effective to control one big market than have a piece in several small ones," he says.
Combined VAT and excise taxes in Poland are currently just a whisker short of double the levels in neighboring Germany and the Czech Republic. So after May 1, according to Bogna Sikorska, cost cutting on operations is an issue that could prove painfully pertinent for domestic brewers.
"If excise taxes don't come down," she says, "brewers will be doing all they can to cut down on costs so as to lower prices."
The policy of the cash-hungry government, then, may be more of a challenge than anything local rivals might think up.
Since its sensational acquisition of Austrian brewery group BBAG last summer, global brewery Heineken has combined all its Central European operations with those of BBAG, under the name Brau Union AG. Consequently, the Żywiec group, as it absorbs Brau Union brands, is increasing its market share from around 31 percent to 35 percent, and has inched ahead of 2002 market leader SAB Miller-controlled Kompania Piwowarska, which controls 32.9 percent and whose results come out this month. Though, as Carlsberg press spokesperson Margarethe Skov points out, Okocim's current market share is incontestably up on 12 percent a couple of years ago, the domestic number three remains way behind its peers with just 14 percent.
Heineken, unlike Carlsberg, undoubtedly has the cash to shop further on the local market. Nevertheless, this may be the point at which the consolidation of the local beer market stops. For, quite apart from the fact that Żywiec may be too busy sorting out its merger anyway, there's almost nothing left to buy.
"You'd have to look at the small breweries that make up the rest of the market. If they have good brands then possibly Heineken might pick them up. Otherwise they'll probably just be gradually squeezed out of the market," says Frederic Gits, analyst at global ratings company Fitch Ratings.
According to independent analyst Bogna Sikorska, the only potential acquisition left is Perła Browary Lubelskie which, though it has only three precent of the national market, controls 30 percent of the market in the Lublin region.
"However, shareholder conflict makes it unlikely that Perła could be picked up by any of the big three," she says.
Apart from slowly slurping up the 20 percent of the market that remains fragmented, breweries expect to benefit from growing beer consumption. Domestic consumption is already approaching European norms whereas, as Frederic Gits points out, "In Russia or Ukraine, growth has only recently slowed down from levels of 20 percent a year."
But with growth now at about eight percent Poland is, for the moment, still an expanding market, and Okocim seems to be picking up growth just as well as its rivals. In 2003, sales income increased by 8.7 percent, putting Okocim pretty much on a level, in terms of organic growth, with both Żywiec and Kompania Piwowarska, which announced domestic sales increases for 2003 of nine percent and 8.2 percent respectively.
The key issues in the beer market now, say analysts, will be cost cutting on operations. And it's precisely here that Okocim, as a distant number three, could find itself somewhat more challenged than its biggest competitors. According to analysts at Fitch Ratings, Carlsberg's operations, throughout Europe, are handicapped by over-spread.
"Carlsberg is spread too thin," says Fitch's Gits, "They're present in far too many countries where they're not number one."
In his view, this is a significant handicap in the beer business, where there are no international economies of scale, and where marketing strategies vary from country to country. "It's much more cost effective to control one big market than have a piece in several small ones," he says.
Combined VAT and excise taxes in Poland are currently just a whisker short of double the levels in neighboring Germany and the Czech Republic. So after May 1, according to Bogna Sikorska, cost cutting on operations is an issue that could prove painfully pertinent for domestic brewers.
"If excise taxes don't come down," she says, "brewers will be doing all they can to cut down on costs so as to lower prices."
The policy of the cash-hungry government, then, may be more of a challenge than anything local rivals might think up.
