The government of the Voronezh Region promised to support Voronezh brewing plant – a branch of OJSC Brewing Company “Baltika” upon condition that they will keep the same production volumes and tax payments.
The Head of the Regional Department for Economic Development Anatoly Bukreev stated that the government of the region is in the process of concluding an agreement with Baltika. In order to reduce producer’s losses and to support Voronezh brewing plant it is soon planning to purchase new equipment for malt production.
The Voronezh brewing plant hasn’t got its own malt house and malt unlike beer is not an excise product and this kind of support isn’t contrary to laws.
Investment volumes into the malt house construction will be near 600 mln. rub. The Voronezh brewing plant places a second position in the region according to the amount of tax payments. The same production volumes of the Voronezh branch company will yield near 1,5 billion rub. including subsidies to the regional budget.
From the one hand the decision of the government of the Voronezh Region looks positive in the matter of the large tax payer and from the other hand it is rather strange taking into account existing excess capacities of malt production in Russia. Proficit of these malt capacities over malt demand of beer and beverage producers is approximately 300.000 tons. Existing malt capacities of Baltika (St. Petersburg, Tula, Yaroslavl) are already sufficient for covering Baltika needs.
In case of this malt house construction competitive struggle in the malt market will strengthen. The logical continuation of this topic will be the possible entrance of the new malt company to the free market and it will give hard times to other malting companies.
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