"Hungarian brewer Dreher is to carry out developments worth HUF 3 billion (EUR 12.14 m) by the end of 2008, Chairman-CEO Hector Gorosabel said. The key upgrade areas will be logistics, information technology and packaging.
Gorosabel also said that without a price hike the local beer industry could find itself in a dire state.
The bulk of the HUF 3 billion investment budget is to be spent on logistics, the upgrade of the company's IT system and the introduction of new packaging, Gorosabel told business daily Világgazdaság in an interview published on Tuesday.
Dreher carried out large-scale investments last year as well, expanding its capacity, implementing efficiency increasing changes in the manufacturing infrastructure and setting up a new biogas generation plant and a waste water treatment unit, which were inaugurated in January this year. Dreher spent HUF 500 m on the latter two facilities.
Biogas created during the treatment of waste water is used to produce thermal energy, covering 8-10% of the former energy consumption needs of the company. This is equivalent with 200-250 households' yearly consumption.
“The primary reason for the past years' developments was that the dramatically increased costs would not allow anyone to remain competitive without the most efficient production methods," Gorosabel told the paper.
He noted that the increase of energy prices resulted in a drastic increase in packaging prices, while it was the shortage of raw materials that led to an increase in their prices.
Gorosabel urged a price hike on the Hungarian beer market, saying that without it the whole industry could find itself in an extremely difficult position.
“Local players generally try to retain or boost their market share by keeping prices low. But if you focus on nothing more than the price and fail to carry out deep-rooting measures to boost production and sales efficiency, you will not be able to operate successfully in the long run," he said.
Last year Dreher revamped its sales system, reducing the role of wholesalers and doubling its own sales staff, hiring some 140 people to this area. The company's total sales team is now around 300 people, and its headcount exceeds 700 employees.
Gorosabel said the sharp excise tax increase in 2005-06 virtually “wiped out" the profit of the beer industry. While beer consumption was up 1.3% year on year in the past 12 months, looking only at the past few months, we find that consumption dropped in annual terms, he added.
2008.05.19 15:27 Hungarian beer sales up 4.7% yr/yr, costs soar by 33% in 2007
Consumption of Dreher products rose 4% yr/yr and the company's profit increased by about 15% yr/yr in the fiscal year ended on 31 March, the CEO added.
Dreher is a subsidiary of SABMiller, the second biggest global brewing group with operations in more than 60 countries over six continents.
The international brand portfolio of SABMiller - listed on the London Stock Exchange and the Johannesburg Stock Exchange - includes the Czech Pilsner Urquell, Italian Peroni Nastro Azzurro, American Miller Genuine Draft and South-African Castle Lager."
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