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Ukraine workers brew up a capitalist success |
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In its ability to achieve firsts, Ukraine’s Obolon Breweries is second to none. Back in 1992, just after the fall of the Soviet Union, it was the first state entity to be privatised. It was the first local company to get an EBRD loan and the first brewery to start exporting. Obolon was at the vanguard of introducing new brewing technology into the country, and at one time had the world’s most advanced beer production line. Not bad for a workers collective which, in substance, Obolon remains despite its capitalist metamorphosis. The brewery is owned by the 1,200 employees on staff at the time of privatisation. Obolon’s workers have long been a canny bunch. In 1991, they leased the brewery from the state for one year, shared among themselves the profits earned in that time, and then used those proceeds to buy the plant. Such worker-led privatisation was common in Ukraine, as in the rest of the former USSR: there are 20,000 of these ‘joint stock companies’ in the country. Many were purchased by staff using state-issued privatisation vouchers. Unusually, though, Obolon survived and thrived while most other large joint stock companies failed. “Obolon is certainly the biggest success story among joint stock companies in Ukraine,” says Felix Potishman, the EBRD banker in charge of the brewery account. Obolon workers’ use of their own funds to buy the assets, as opposed to depending on the ‘free’ privatisation vouchers, was taken by the EBRD to be a sign of the company’s strength when the Bank was organising its first loan to the brewery a loan back in 1997. Since then the EBRD has provided a total of $50 million to Obolon. It is strange how empty the factory floor is, given the fact that staff numbers have more than doubled to 2,800 since privatisation. Production is highly mechanised and employs cutting edge technology. Each minute of every hour of each day, thousands of bottles rattle and glimmer as they shuttle along the production line that winds its way circuitously through a soccer pitch-sized room. They’re held in a track that snakes first this way to the beer spigot, then doubles back that way to the labelling machine, then slides slightly downward to where the bottles are capped, then zooms up and over to the finishing line where the beer is crated for delivery. The process is mesmerising to watch. “Our new production line has the capacity to fill 110,000 bottles per hour which, at the time it was installed in 2004, was the biggest in the world,” says Olena Peresada, Head of Obolon Loans and Investments Department. Beer’s gain is vodka’s loss Obolon, which claims 30 per cent of the national beer market, now makes seven times more beer than it did in 1992 to meet booming demand. Ukrainians are switching en masse from vodka to lighter drinks: beer consumption nationally has almost doubled from 30 litres per capita in 2004 to 50 litres in 2006. The company also accounts for 90 per cent of Ukrainian beer exports. Its products appear in shops in places as far as Africa and Australia. But where are all the workers? “Everyone who wanted to stay with the brewery back when we were privatised kept their jobs,” says Ms Peresada. “But we’ve moved people out of production, now that we have top quality machines to do that work, and re-trained them for more exciting work in what were new career fields back in the 1990s in Ukraine. These include marketing, sales, quality control and human resources, for example. We also have had to expand in areas such as distribution.” Dividends paid About 10-13 per cent of profits are paid out in dividends each year, said Nina Chopyk, Head of Obolon Technical Control. No shareholder is allowed to own more than one per cent of the company, and that goes for PepsiCo, which owns 0.97 per cent, as well as everyone else. However some shareholders have banded together to form ownership blocks in support of the long-serving President, Oleksandr Slobodyan. Obolon has clearly learned that sales are all about the sizzle rather than the steak, or in this case, more about the bubbles than the beer. Each year, as in the fashion industry, they have a spring and summer ‘collection’. The top beer in that collection is available to consumers for a scant 1000 hours, “after which it will never be brewed again”, says Obolon PR Chief Oksana Pyrozhok. That kind of exclusivity appeals to young Ukrainians who like the image created for Hike Premium. Obolon Light, meanwhile, is more for the middle-aged. In fact the brewery offers a dizzying array of beers of differing hue, sold in a variety of bottle shapes with a wide range of label designs, each appealing to a different market segment. Obolon also bottles soft drinks and water, and provides plastic litre bottles to other drinks companies. It hasn’t forgotten its environmental obligations either: 15,000 used bottles are processed in its recycling centre each hour.
By Kate Dunn, Senior Communications Adviser.
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