Russia is the 3rd largest beer market in the world with a total annual consumption of 95.7 million hectoliters as of end of 2006. Russian beer market has undergone a process of rapid consolidation owing to its 15% CAGR growth in the last 10 years leading to an increased appetite of the World's leading brewers to have a share of this growth. More than 85% of the Russian beer market is held by foreign players as of end of 2006.

Despite its rapid growth, the per capita consumption of 65 liters in Russia, which is below comparable averages (i.e. 74 liters in Western Europe), suggests the potential for growth of the market. This potential is supported by the increase in the disposable income per capita and the tendency for the consumer demand to shift from hard liquors to low alcohol beverages in Russia.

EBI succeeded to become one of the leading brewers in Russia by outperforming the market growth since it started commercial production in Russia in 1999. The acquisition of the KV Group which was completed in February 2006 fortified EBI's strong presence in Russia, in addition to providing efficient access to the eastern and far eastern regions where faster future growth is expected.

Currently, EBI has 20.2 million hectoliters of brewing capacity in 5 breweries (Moscow, Rostov, Ufa, Kazan, Novosibirsk), and 139,000 tonnes of malt production capacity in 4 malteries. The vicinity of the malteries in Moscow and Kazan to the breweries provides an important strategic advantage of supplying the key raw material used in beer production.

Furthermore, the pre-form production capacity of 1.3 million per day constitutes a significant element in controlling the costs with respect to meeting the high PET package demand in Russian market. EBI's sales volume in Russia, which accounted for 73% of total international beer sales volumes in 2006, has increased 44% and reached 8.7 million hectoliters. Excluding KV Group brands, EBI's organic sales volume growth in Russia in 2006 was 10%.

The fact that KV Group breweries had the latest technology and were in good condition allowed them to be integrated quickly and easily into EBI's operations without the need of large investments. In a short time after the completion of the acquisition, cross brewing of all the brands in EBI's portfolio, except for the licenced brands, was commenced and at the same time the integration of KV Group's sales and distribution network into EBI was finalized.