Kazakhstan, the largest country in the region after Russia, has significant natural reserves including oil, some minerals and metals in addition to a large agricultural sector. Kazakhstan enjoyed strong growth rates in the past due to the contribution of the developing energy sector, as well as increased foreign investment flows into the country. However, GDP growth slowed in 2008 and turned into a declining trend in 2009, due to the downturn in oil and metal prices, as well as the problems in the Kazakh banking sector following the global financial crisis.

Despite the declining trend in the last two years, the Kazakh beer market almost quadrupled in the last decade and is expected to achieve a further 7.5% CAGR within the next five years (Canadean Global Beer Trends, 2009). The low level of per capita consumption of 35 liters, which is almost half of the Western Europe average of 68 liters, is a good indicator of the future growth potential of the market.

In Kazakhstan, EBI’s volume performance was again ahead of the market with a high single digit sales volume growth in 2009 over the previous year despite the decline in the beer market during the period. As a result, EBI’s market share increased to 35% in 2009 versus 31% in 2008 on a proforma basis.

Efes Kazakhstan has a competitive, differentiated brand portfolio. In Kazakhstan, a majority of EBI’s sales volume is generated by the local “Karagandinskoe” brand, which is the leading brand in the lower mainstream segment and in the total Kazakh beer market (AC Nielsen). In 2009, our major “Karagandinskoe” product line, “Kruzhka Svezhego,” continued its dynamic growth, further strengthening the brand’s leadership in the Kazakhstan beer market. New extensions of “Kruzhka Svezhego,” such as “Kruzhka Svezhego Mild” and “Kruzhka Svezhego Velvet,” were launched in April and December 2009, respectively.

In May 2009, the flagship brand of our Group, “Efes Pilsener,” renewed its visual identity and communication strategy in accordance with the global brand repositioning. In addition, local brand “Tyan-Shan” was relaunched with new positioning and packaging in June 2009. Efes Kazakhstan currently markets “Heineken” in the super premium segment, “Efes,” “Amsterdam Navigator” and “Bavaria” brands in the premium segment, “Sokol,” “Stary Melnik” and “Gold Mine Beer” in the upper mainstream segment, “Karagandinskoe,” “Beliy Medved” and “Tyan-Shan” in the lower mainstream segment.