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Carlsberg shares hit

COPENHAGEN : Shares in Danish brewer Carlsberg A/S slid on Wednesday on worries that its largest single market, Russia
Published July 6, 2011

euterCOPENHAGEN: Shares in Danish brewer Carlsberg A/S slid on Wednesday on worries that its largest single market, Russia, could pass a law that would severely restrict beer sales.

Russia is considering a ban on the sale of beer with alcohol content of more than 0.5 percent between 11 p.m. and 8 a.m. in shops. The bill would also ban the sale of beer altogether at outdoor kiosks, train stations and street stands, at which around one third of Russia's beer is sold.

Carlsberg's stock, which touched a near four-month low of 546 crowns, traded down 2.5 percent at 556 crowns by 1030 GMT, against a 0.6 percent fall in the Copenhagen bourse's blue chip index.

Carlsberg, the beer market leader in Russia which accounts for about 40 percent of the group's total beer volume, owns the Baltika brand.

Deputy Prime Minister Victor Zubkov held a meeting on Tuesday on the bill, which is expected to be passed by the end the week, just before the Duma goes on summer recess.

The ban would take effect from Jan. 1 2013.

"Of course it will have an effect on Carlsberg, but it is difficult to estimate how big," Alm.

Brand analyst Stig Nymann said. "This sounds worse than what we have been presented with before."

Carlsberg's spokeswoman for eastern Europe, Tatiyana Antonchik, said the company was following the situation but it was difficult to know exactly what was on the agenda.

"Before we see the bill itself it is difficult to make a decision," Antonchik said. "We won't know until we see the draft bill.

This time they will try to make it more strict."

Jyske Markets analyst Jens Houe Thomsen said in a note to clients that the proposed restrictions would pose a challenge for brewers but one they could cope with.

"We therefore maintain our 'buy' recommendation (on the stock) and see today's share price drop as a buying opportunity," Thomsen said.

The Russian market grew about 1 percent in the first quarter of this year and Carlsberg said last month it expected the market to grow by between 3 and 5 percent in the medium term as the economy recovers. Reporting first-quarter results in May, Carlsberg said a recovery in eastern European demand helped drive a 38 percent rise in profits.

Copyright Reuters, 2011

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