But cash-hungry exporters still lack money to market their products to a broader consumer base
Ukraine’s booming beer industry, which has been increasing annual production at up to 40 percent in the last several years, has begun to overflow into foreign beer markets.
The country’s top two beer breweries – the Kyiv-based Obolon brewery and Zaporizhya’s Slavutych brewery – have even entered the American beer market in the past year, with both companies boasting significant exports – most of which supply a dedicated following of beer drinkers with Ukrainian roots. Immigrants of both Ukrainian, Russian and Jewish descent make up most of the drinkers, analysts say.
But the breweries are still millions of dollars short of the capital needed to launch big marketing campaigns in order to convince the general American public that Ukrainian beer is as good as, if not better than, other brands such as Budweiser, Corona and Heineken.
“Ukrainian beer can now be bought in America,” says Yakov Bromberg, president of Doyna Ltd. (www.doynaamericawine.com), the Brooklyn-based importers of Obolon beer. Doyna started operations almost four years ago importing other alcoholic beverages from Eastern Europe, such as Moldovan wine and Georgian cognac. The owners and its workforce are immigrants from Eastern Europe – including Ukraine.
According to Bromberg and Obolon representatives, Doyna has already imported about 500,000 bottles of Obolon into the United States since early 2000.
That equals some $800,000 in sales, considering that each bottle sells for an average of $1.60.
In contrast, the Mexican beer Corona – the number one imported beer into the United States – imports between 200 million to 600 million bottles per year.
Nevertheless, Bromberg says that Obolon imports compare favorably to other recent entries – like Czech and Polish beers, which first entered the United States between five and eight years ago. Today, they are each selling about 1 million bottles annually.
But will the American public really buy Ukrainian beer over popular German and U.S. brands, such as Coors and Budweiser?
Bromberg not only says yes, but argues that it’s been done before.
“Corona, a beer from Mexico – a country, which unlike Germany, was hardly known as a traditional beer country, first entered the American market about 20 years ago,” he said. “Today, it’s the number one selling imported beer in the U.S.”
Over the past five years, Obolon has clearly established itself as the dominant Ukrainian brewery in terms of exports. According to company representatives, Obolon beer can now be bought in Russia, Germany, Israel, as well as in Asian and African countries.
According to Mykhailo Zelenko, an Obolon export specialist, Obolon exports almost 2 million bottles per week to Russia, which has forced Moscow to draft an import tariff on beer that is expected to be imposed early next year.
He added that while Russia is its largest market outside of Ukraine, the European market is growing steadily, with Germany buying almost 500,000 bottles since the beginning of this year.
Slavutych, which has pum-ped $49 million in foreign investments into new technology since 1996, targeted the U.S. market first, with its first exports arriving in the United States last November.
According to Ihor Tovkach, PR manager to the general director at Slavutych, the company also exported some 500,000 bottles to the United States via the Doyna Michigan Company – an offshoot of the Brooklyn-based Doyna.
“The fact that Ukrainian beer has already made it to America is proof of its quality and taste,” Tovkach said.
Beer from both companies can currently be bought in around 20 states – including New York, New Jersey, Pennsylvania, Illinois and California – all of which have large populations of Ukrainian immigrants.
And both companies say that they will distribute in all 50 states and Canada by the end of 2001.
Industry analysts agree – Ukrainian beer has already proven it can sell in significant quantities around the world, but the bigger fight – winning over “plain old Americans” in the consumer driven U.S. economy – is the real prize.
If Ukrainian beer succeeds in the West, all Ukrainian products will be affected, they say.
“If you make it in the U.S. market, you practically have access and reason to succeed in any market,” Doyna’s Bromberg said. “People will say: Ukraine is now in America … that means it’s products are good.”
“But to do this, we need more financing for advertising.”
Bromberg recognizes that the Ukrainian-based breweries are not overflowing with cash for such investments, but still urges them to invest a little more. He also says his company would be glad to consider any future partners interested in investing in such a project.
Meanwhile, the local breweries maintain that there is a lot of work to do on the local market, but they also appear to be aware of the significance of their exports to the United States.
According to Yury Berdynykov, Obolon’s director for foreign economic relations, the company is currently paying back a $40 million EBRD loan received several years ago, most of which was used to buy modern brewery equipment.
“Financing is tight right now, but plans to support the fight for the U.S. market are in the works,” he said.
And while Obolon is the undisputed beer export leader of Ukraine, Slavutych is not sitting on its hands.
“Slavutych is currently generating an optimal plan for pushing its beer in America,” Slavutych’s Tovkach added.
