BELUGA GROUP announces operating results for Q1 2022

april 7 /2022
  • The company’s overall sales grew by 25.1%
  • Sales of the company’s own brands grew by 21.6%
  • Sales of imported brands increased by 45.9%
  • Export sales showed a 17.2% growth

In Q1 2022, BELUGA GROUP, Russia’s largest alcohol company, demonstrated record sales: total sales reached 4 231K 9L cases, a 25.1% YoY increase.

Sales of the company’s own brands rose 21.6% to 3 465K 9L cases. The bestsellers were Beluga (+51%), Arkhangelskaya (+54%), and Snow Owl (+42%) vodkas, Fox & Dogs whiskey (+15%), Golden Reserve (+21%) and Treasure of Tiflis (+87%) brandies, Beluga Hunting bitters (+36%), Green Baboon gin (+201%), as well as Golubitskoe Estate still and Tête de Cheval sparkling wines (+25% in total).

Imports of exclusive partner brands within Russia were also in high demand. Sales of these products rose by 45.9% to 767K 9L cases. In the spirits category, the biggest growth was shown by Grant’s (+37%), Monkey Shoulder (+121%), and Tullamore D.E.W. (+39%) whiskey, Barceló rum (+46%), Torres brandy (+62%), and Noy Armenian brandy (+52%). The best dynamics out of imported wines were shown by J.P. Chenet (+139%), Faustino (+89%), Barefoot (+36%), Calvet (+44%), Piccini (+112%), and Masi (+39%).

Export sales grew by 17.2% YoY. Beluga did particularly well accross all markets.

Alexander Mechetin, CEO of BELUGA GROUP, commented on these results as follows: "In the first quarter, our company showed double-digit growth owing to the increased demand in a situation of uncertainty and the consumers’ desire to stock up on products. During this time, the team worked at top speed and with utmost precision to ensure high quality and continuity of operations.

Over this period, the team faced new challenges related to logistics, production support, and calculations, which we are now tackling successfully. I would like to note that the share of imported components used by BELUGA GROUP is small, and we only use raw materials from Russia or countries within the EAEU to manufacture products under our own brands. The company also takes a number of measures aimed at strengthening cash flow. Among them are cost reductions, including lowering investments in marketing and optimizing the capital investment program.

In the reporting period, we launched two new products of our own brands: Fox & Dogs Apple Pie whiskey and Golden Reserve National Selection France brandy. On top of that, we began to offer Italian wine brands Duca di Salaparuta, Corvo, and Florio in Russia. I would like to point out that most of our foreign partners have not suspendes supplies and are focused on long-term cooperation. In case such suspension takes place at some point, we have amassed a sufficient stock of imported alcohol at our warehouses in Russia and Riga.

At the same time, our company is capable of substituting the imported drinks with our own products in the most negative case. Besides vodka, our portfolio includes some of the leading products in their categories: Golden Reserve and Bastion Russian brandies, as well as the Georgian Treasure of Tiflis, Fox & Dogs whiskey, Green Baboon premium Moscow gin, Devil’s Island rum, and also Tête de Cheval and Golubitskoe Estate Russian wines. All of these brands showed growth in the reporting period, indicating an increase in consumer loyalty and demand for these brands. We hope for uninterrupted supply of imported products and are building up stocks in order for our business to continue, but we are also prepared for other scenarios. I would point out that the broad diversification strategy in both product and price segments is effective both for a growing market and amid the current turbulence. We offer brands in different segments, including premium, mid-price, and value, and our company is well-prepared for any outcome.

Abroad, we posted a +17.2% performance; however, we expect the growth rate to slow down in 2022. This is due, firstly, to a decline in sales in a number of European markets because of the temporary refusal by certain retail outlets to continue cooperation, and secondly, to the embargo imposed by the U.S. The latter had amassed a substantial stock at the beginning of the year, therefore we do not expect a significant decrease in performance. By the end of the year, we expect exports to amount to 80–90% of the 2021 figures, as the company is exploring new promising countries for partnership, as well as recording growth in the first quarter in the Middle East, Asia, and Latin America. At the same time, the decline in travel abroad will lead to an increase in domestic tourism and consumption, also expected to help offset possible losses on exports.

A few words about WineLab: sales by the outlet chain increased by 52%. This high figure is due to the harmonious growth of both customer traffic and the average check; the first figure increased by 35%, the second, by 13%. The number of outlets increased to 1,124. The e-commerce sector continued to develop. In Q1, click & collect sales increased 2.4 times YoY, and the share of e-commerce in the chain is now 5.8% versus 3.5% last year. More than 53,000 e-orders are picked up in WineLab stores every month. Having its own retail chain gives the Group the advantage of a relatively short capital turnover, fast cash flow, and the ability to react quickly to currency exchange rate changes for price regulation purposes. At the moment, this is a serious competitive advantage. The company will continue to invest in WineLab, but will review the selection of locations for new outlets on a case-by-case basis, which will probably slow down, but not stop the chain’s development.

In conclusion, I would like to note that the demand for our products is steady both in stable and turbulent times. The company entered the crisis period well-prepared; we have a professional team, strong brands, and stable finances. There is no doubt that BELUGA GROUP will overcome this adversity and increase its market share, as it remains a reliable supplier for customers, partners, retail chains, restaurants, and traditional retailers. We promptly respond to changes associated with the exchange rate and adjust our pricing accordingly, striving to accommodate fans of our brands at the most fair prices."

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