BELUGA GROUP announces its operating results for 1H2021

Results vs 1H2020 and 1H2019:

• Overall sales up 1.3% and 16.3% respectively, to 7.3 mln 9L cases.
• The sales of imported brands up 21% and 71% to 1.1 mln 9L cases.
• Export sales of Beluga super-premium brand exceeded same period of the pre-crisis year 2019, and rising 107% versus 1H2020

The company's overall sales totaled of 7,266 thousand 9L cases in the first half of 2021, up 1.3% from 2020 year on year, even though sales had surged last year in the wake of the pandemic. The growth was 16.3% vs same period of the pre-pandemic year 2019, indicating a confident arrow up in BELUGA GROUP sales.

Sales of the company’s own brands did no change from the six months of the previous year. Double-digit growth was shown by brands in the premium segment and higher, which indicates a better sales margin. Demand surged for the Gin and Whiskey categories alongside vodka during the period reported, vindicating timely and correct decision to diversify portfolio. The key brands showing a strong growth dynamic were Snow Owl and Arkhangelskaya vodkas, Bastion cognac, Fox & Dogs whiskey, Green Baboon gin, and the wines Golubitskoe Estate and Tête de Cheval.

Sales of imported partner brands rose 21% to 1,076 thousand 9L cases. The spirits brands with the most impressive growth showings were Camus cognacs and some titles from the William Grant & Sons portfolio, most notably The Balvenie, Glenfiddich, Monkey Shoulder. Imported wine sales increased 17%.

Alexander Mechetin, Chief Executive Officer of BELUGA GROUP commented on the results 1H2021: "We have further strengthened our leadership, besting even the high showings for the same period in 2020, when sales surged in March and April due to the pandemic. The company has cemented its last year's success, showing a small but confident improvement. What's most important is that we improved our sales mix during the period reported. In the first place, we saw an increase in imported brand sales. Secondly, sales of our flagship Beluga brand went up both in Russia and internationally, and thirdly, sales of other premium vodkas also improved. Last but not least, non-vodka products such as gin or whiskey also did great. Generally, the first six months of this year have been packed with milestone events across our entire spectrum of business. We remain committed to our diversification strategy, which is taking on a new dimension in light of the recent developments.

The company completed its second public offering in early June, selling two million shares to Russian and international entities, including front-tier institutional investors, as well as individuals. The RUB 5.6 billion received in SPO proceeds will be invested in the group's growth and transformative projects. Our priorities include the launch of new WineLab outlets, a boost to e-commerce, and, last but not least, export marketing of the Beluga brand.

Speaking of our flagship brand, there's some great news from the USA, a crucial vodka market, where our brand has posted a whopping 73% growth for the period. There has been a positive dynamic also in Israel, UK, Australia, Germany, Poland, Slovak Republic, and Bulgaria. Beluga's export stature has improved even compared to the pre-crisis year 2019.

We have seen a few new arrivals among our in-house brands in the first six months: sales kicked off of the gluten-free Myagkov Ultra Light vodka and the 8-year Golden Reserve Export Edition 8 and Bastion France VSOP cognacs, the latter being distilled with select French cognac spirits. We keep building up our wine business: Golubitskoe Estate sales reached seven-digit figures in 2020. Not a bad start! In addition to the core collection, our winemaker team launched a few exclusive products in the period reported, namely Golubitskoe Estate Red Blend, which is a blend of the classic European varietals Cabernet-Sauvignon and Merlot, Golubitskoe Estate Orange Riesling, and the Noble Selection family of vintage wines dated 2016, the year of the debut harvest at Golubitskoe Estate, grown on dedicated terroirs and harvested manually.

The premium quality of our brands has been attested by independent experts. Three BELUGA GROUP brands were named on the 2021 annual The Millionaires’ Club rankings by the high-profile British magazine Drinks International, which ranks global spirit brands selling over 1 million 9L cases: Belenkaya, Arkhangelskaya, and Tsar. Arkhangelskaya tops the ranking of fastest-growing spirit brands worldwide across all categories while Belenkaya is the No. 1 Russian brand in the general ranking.

Whilst working to advance its own brands, the group uses its best endeavor to increase the sales of partner wine and spirit brands in Russia. Partner brand sales rose 21% in the period reported. We have marked a decade of our business partnership with William Grant & Sons on July 1. Russian sales of their products have multiplied almost by a factor of five over the years of our doing business together, while some brands — Grant’s, Glenfiddich, and Tullamore D.E.W. — have made the top 3 in their respective categories or segments.

Our WineLab retail chain, a successful line of business in its own right, nicely complements our business model. The number of WineLab stores had cleared 700 by the end of the six months, and sales climbed 25%. E-commerce keeps making strides: we sold more products online via our click & collect system in the six months of this year than we did in eleven months in 2020. E-commerce has increased 2.5 times as a percent of our aggregate retail sales, reaching 7.5% for Moscow and Moscow Region, and 11% for St. Petersburg. We have been working in partnership with the SberMegaMarket marketplace to boost online sales. The partnership program currently covers all our chain stores and some 1,000 titles of still and sparkling wines, liquors, and other beverages.

Being a large and responsible business, we are aware of the criticality of following the principles of sustainable development. We published our debut ESG report for the group at the end of May, prepared according to the GRI Standards. The report discloses our 2020 performance results in such areas as business development, environment protection, accountability to employees and community, sustainable development initiatives, and anti-COVID-19 action by the company. We intend to further enhance our sustainability effort for the sake of our employees, society, and the generations to come.

Our 1H2021 results are predictably impressive. I highly appreciate the commitment of our team, and my colleagues' creative, proactive approach on problem-solving amid uncertainty and mounting competition. I cannot fail to note that the effective performance of all our departments, our strong brand portfolio, our in-house retail chain which promptly puts our products on the shelf, our professional management, and our well-defined strategy, all this keeps the group at the top of Russia's alcoholic beverages industry. We have big plans for the future. We are starting the new half-year with renewed vigor and new goals in mind."