Russian firm acquires iconic American brewing company Pabst Blue Ribbon

Russian firm Oasis Beverages announced this week that it will be acquiring famed American brewery Pabst Blue Ribbon — 170 years after the company was first established in Milwaukee.

“Pabst Blue Ribbon is the quintessential American brand — it represents individualism, egalitarianism and freedom of expression — all the things that make this country great,” said Eugene Kashper, chair of Oasis Beverages, in a statement.

“The opportunity to work with the company’s treasure trove of iconic brands, some of which I started my career selling, is a dream come true.”

The terms of the transaction have yet to be disclosed, according to the New York Times.

However, the chair of Russia’s largest independent brewery noted the company would continue to be based out of Los Angeles. American private-equity firm TSG Consumer Partners will take a minority stake in the company as well.

Besides the enterprise’s iconic namesake beer that has succeeded in capturing the heart of hipsters worldwide, the Pabst Brewing Company is home to myriad iconic American brands including Lone Star, Schlitz and Old Milwaukee.

A 1911 advertisement showing a blue ribbon tied around the bottle

Mondelez Will Spend $110 Million on New Snack Factory in Russia

Mondelez International Inc. (MDLZ), the U.S. company that makes everything from Oreo cookies to Trident gum, plans to spend $110 million on a new factory in Russia, navigating an increasingly tense geopolitical climate.

The company’s Russian unit will build the plant in the Novosibirsk region, adding enough capacity to produce 50,000 tons of snacks annually, spokesman Michael Mitchell said today in a statement. The factory, which will be Mondelez’s most advanced facility in Russia, is expected to create 180 jobs.

Mondelez, formerly Kraft Foods Group Inc.’s snack business, is pushing ahead with expansion in the country even as political tensions create headwinds for American companies operating in the region. The U.S. and Europe are threatening to step up economic sanctions against Russia following President Vladimir Putin’s move to annex Crimea from Ukraine last month.

Mondelez’s move is part of a previously announced effort to improve its supply chain. The company is trying to save $1.5 billion in net productivity and increase cash flow by $1 billion over the next three years, Mitchell said. The new plant will produce Jubilee, TUC and Barni biscuits, as well as Alpen Gold, Milka and Vozdushnyy chocolate.

The Deerfield, Illinois-based company is adopting “a number of initiatives around the world to capitalize on growing demand in emerging markets, while also aggressively reducing costs and improving productivity,” Mitchell said in the statement.

Last week, McDonald’s Corp. said it was closing its three locations in Crimea, citing the loss of “necessary financial and banking services.”

“It is important to note that this is strictly a business decision which has nothing to do with politics,” the Oak Brook, Illinois-based restaurant chain said in a statement. “We are taking numerous steps to support our employees during this time. We hope to reopen our restaurants soon so we can welcome back our loyal customers.”

Facebook's Russian Campaign

(Bloomberg.com)The world's No. 1 social network wants to move up from fifth place in Russia, whose citizens spend more time on social networks than any other nation

Facebook is the world's largest social network site, with 500 million-plus members at last count. However, there are plenty of big markets where Mark Zuckerberg's creation isn't dominant. In Japan, Facebook doesn't rank in the top three, and the site isn't much of a force in Brazil or China, two populous countries where Internet usage is off the charts.

The outlook for Facebook in Russia may be more promising, despite the popularity of homegrown social network sites. Facebook officially launched its site in April and only ranks No. 5 so far, according to Internet tracker comScore, but its growth has been impressive. From January until August in 2010, its Russian operation has racked up a 376 percent increase in users, to 4.5 million, according to comScore data.

Early last year the company cut deals with Russian wireless carriers Beeline and Mobile TeleSystems, so that their subscribers could tap the mobile version of Facebook. To overcome the language barrier, Facebook allowed users to suggest translations for the name of features not easily understood in Russian such as "poke" (as in trying to get another Facebook user's attention), and then let the site's members vote them up or down. "Russian is a very complex language, so we allowed the users to translate the interface themselves so that it captures the complex grammar," says Javier Olivan, a London-based Spaniard who holds the title Head of International Growth at Facebook.

Its founder has made no secret of his ambitions to thrive in Russia, a market where other Western players, including Google, have struggled to get their footing. Speaking at an Oct. 17 event at Stanford University, Zuckerberg said that if Facebook succeeded in penetrating the Russian market, it might have a shot at doing the same in China, the country with the largest number of Netizens. Russians' heavy use of social network sites makes the country an ideal test-case. Russians spend 9.8 hours per visitor on a monthly basis on such sites—more than double the world average, according to comScore.

Why do Russians while away so many hours online? For one thing, there's the climate: Staying indoors and socializing via the Internet is much more attractive when winter lasts a good six months. Then there's the physical isolation, compounded by poor infrastructure, especially in cities like Murmansk, which lies north of the Arctic Circle.

Most importantly, though, there is a long tradition in Russia of relying on informal information networks for simple day-to-day survival. "In Russia, there is no sense that you can rely on the public or the system, so you've traditionally had to rely on a network of friends," says Esther Dyson, a venture capitalist who has been investing in Russia's tech sector for over a decade. In a country with weak institutions, "it's very natural for people to network for what they want." Even in these less oppressive, post-Soviet times, relationships are critical to everything from landing a job to wriggling out of a problem with authorities.

It's no coincidence that the Russian love affair with the Internet has blossomed at a time when citizens are once again seeing their political and media freedoms dwindle. "[The Web] has become a place where you have absolute freedom of speech, where you can say whatever you want, good or bad," says Ilya Krasilshchik, editor-in-chief of Afisha, a Russian lifestyle magazine and website. Afisha was one of the first Russian sites to incorporate the Facebook Like feature, which allows users to share content with friends on the site. Krasilshchik points out that Russia is different from China, where censorship prevails online. "We have this strange paradox where civil society is hemmed in, but its freedoms are limitless online."

Not surprisingly, then, social networks have multiplied in Russia. Odnoklassniki.ru, a site modeled on Classmates.com with 17 million users, is the preferred destination for older, less tech-savvy users, along with being a popular dating site for Russians of all ages. Then there's Moi Mir, similar to News Corp.'s (NWS) MySpace, with 20 million members.


The leader of the social networking pack is VKontakte, which is majority owned by Mail.Ru Group, a Russian investment fund specializing in Internet companies that also owns a small stake in Facebook. VKontakte, which has 28 million users, is inspired by Facebook. VKontakte has been dogged by claims that it has allowed the unauthorized posting of pirated music, movies, and other content free on its site. Mail.Ru declined to comment on allegations that VKontakte has engaged in such practices, though the company did disclose in a prospectus for a recent initial public offering in London that it is currently defending itself against several lawsuits. As for Facebook, the company "will not host any content that violates our terms of agreement," says Olivan.

One thing Facebook does have over its Russian competitors is cachet. Whereas Odnoklassniki.ru has become the domain of the older generation, and VKontakte the hangout of young middle- and lower-class Russians, Facebook is the network of choice for the urban and the urbane. Facebook's Russian users are generally of the wealthier, well-traveled, cosmopolitan variety, have foreign friends and tend to live in Moscow and St. Petersburg.

Facebook's status received a boost in September, when the company hosted its first developers' conference in Russia. The event, held in Winzavod, an up-and-coming art complex in Moscow, drew hundreds, including some prominent Russian Internet investors. The bulk of the crowd was made up of software developers hoping to transform their Facebook apps into riches.

Anton Nossik, the Russian Web guru who has a number of successful Web startups and used to run the company that owned the popular blogging platform LiveJournal, notes that in Russia sites such as Facebook and Google attract a particularly cosmopolitan set. Both are "for the global Russian, for the circle of people for whom the world doesn't begin and end with Russia."

Russia bans grain exports amid drought

(NY Times) — Russia announced Thursday that it would ban grain exports through the end of the year, a response to a scorching drought that has destroyed millions of acres of Russian wheat and hobbled the country’s agricultural revival.

The ban on grain exports by Russia, one of the world’s largest wheat producers, helped propel wheat prices in the United States toward their highest levels in nearly two years and raised the prospect that consumers could pay more for products like flour and bread as Russia tries to conserve its supplies of wheat, barley and other grains for its own people.

In announcing the ban, which is in force from Aug. 15 to Dec. 31, Prime Minister Vladimir V. Putin said that Russia had sufficient stockpiles of grain but that blocking exports was an appropriate response to the worst drought in decades.

“We need to prevent a rise in domestic food prices, we need to preserve the number of cattle and build up reserves for the next year,” he said during a televised cabinet meeting, according to The Associated Press. “As the saying goes: reserves don’t make your pocket heavy.”

Russia’s agricultural output, once the victim of chronic shortages during the Soviet era because of unwieldy bureaucracy and failed farm policies, had grown as the country privatized old collective farms and gained force as a food exporter.

Russia’s Grain Union reduced its forecast for this year’s harvest by 15 percent compared with last year’s crop, and more than a dozen regions of the country have declared states of emergency. Mr. Putin said Thursday that the grain reserves would be distributed to people in the hardest-hit areas.

“As of today, Russia has no grain market,” Kirill Podolsky, chief executive officer of the Russian grain trader Valars Group, told Bloomberg News. “This will be a catastrophe for farmers and exporters alike.”

Belarus: we'll cut Russian oil, gas supplies to EU

(AP) MINSK, Belarus — Belarus issued a new threat Friday to halt Russia's oil and gas deliveries to Europe unless its pays a disputed debt, but Russian leaders ignored the warning and said they consider the energy dispute with the ex-Soviet neighbor closed.

Later Friday, Belarusian officials told President Alexander Lukashenko that officials from Russian state-controlled gas monopoly Gazprom were arriving Monday for talks, and that a deal could be signed Wednesday. The statement indicated Belarus may tacitly be backing off.

Gazprom on Thursday resumed supplies to Europe via Belarus, following three days of partial cutoffs after Belarus paid down its debt for gas supplies. Russia in its turn made transit fee payments to Belarus.

The dispute, which briefly caused a 40 percent drop in Russian gas supplies to EU-member Lithuania, added to the EU's concerns about Russia's reliability as a top energy supplier. A similar row with Ukraine last year cut off heating to millions in the middle of winter.

Belarus said it paid off its gas debt calculated at an increased rate sought by Moscow, and raised the transit costs accordingly. Russia, meanwhile, has paid for transit under the old rate, leaving the outstanding amount of $32 million, Belarus said.

Belarus warned it would cut the Russian gas transit supplies to Europe on Thursday if Russia doesn't pay the money, but it didn't deliver on that threat. On Friday, Belarusian President Alexander Lukashenko gave Russia until Saturday to pay the alleged debt or face the shutdown of all its oil and gas shipments to Europe via Belarus.

Gazprom has insisted it owes nothing, having paid the fee stipulated in the contract. The company said it could pay a higher transit fee in the future if Belarus allows it to cut a higher income on sales of gas at its domestic marker.

Gazprom's chief executive, Alexei Miller, said Friday it expects to sign a corresponding supplement to the contract with Belarus in the nearest time. He wouldn't comment on Lukashenko's threats, saying only that Russia considers the gas dispute closed.

Russian President Dmitry Medvedev said in a televised hookup from Canada, where he is attending a summit of global leaders, that he hopes that Belarusian officials "cool down" and fulfill their obligations under the contract with Gazprom.

Russia is Belarus' main ally and sponsor, but relations between the two former Soviet countries have worsened over financial arguments. Belarus has insisted that Russia should provide cheaper oil and gas as part of the customs union deal that is to come into force next month, but Russia has refused.

Russia cuts gas supplies to Belarus over debt

(AP) MOSCOW — Russia on Monday cut natural gas supplies to ex-Soviet neighbor Belarus over what it claims is a debt of nearly $200 million for gas already provided.

President Dmitry Medvedev met early Monday with Alexei Miller, the chief of state-controlled gas monopoly Gazprom, and in televised remarks ordered him to implement cuts "to protect the interests of the Russian state."

Miller said the company would gradually cut gas supplies to Belarus by 85 percent, the remainder serving to maintain its pipeline that is also used for transit of Russian gas supplies to other parts of Europe.

Russia last week warned Belarus to start paying off the debt or face cuts . Belarus has challenged the Russian claim and refused to pay.

Miller has said that European customers won't be affected as the company can channel gas supplies normally going via Belarus to another transit pipeline crossing Ukraine. Also, gas consumption in summer is low compared with its peak in the winter and the pipelines aren't filled to full capacity.

Moscow-based Metropol investment bank also said in a note to investors that the shutdown is unlikely to hurt Gazprom's customers in Europe during the low season. "Gazprom could ship the gas through Ukraine to Poland and on to Germany," it said, adding that the conflict will likely be resolved quickly.

Russia has cut gas supplies to both Ukraine and Belarus several times in recent years due to payment disputes, and many European consumers have suffered amid freezing winter temperatures.

Russian GDP Grew 2.9% Last Quarter on Stimulus, Oil

(Bloomberg) -- Russia’s economy expanded for the first time since 2008 in the three months through March as the world’s biggest energy producer rebounds on an oil-funded stimulus program and record-low borrowing costs.

Gross domestic product rose an annual 2.9 percent in the first quarter after contracting 3.8 percent in the last three months of 2009, Economy Minister Elvira Nabiullina said at a meeting in Moscow today. The median estimate in a Bloomberg survey of 12 economists was for 4.8 percent growth. GDP shrank 7.9 percent in 2009, the biggest decline since the collapse of the Soviet Union in 1991. The statistics office is due to publish official GDP data later today.

Prime Minister Vladimir Putin last month said Russia’s recession “is over” after 3 trillion rubles ($99.6 billion) in stimulus spending left the economy “confidently showing signs of recovery.” Russia is poised for the world’s “biggest bounce,” Bank of America Merrill Lynch said last month, and estimates output may grow 7 percent in 2010 as companies rebuild stocks and stimulus spending supports demand.

“We see the economy recovering relatively briskly this year, as the strengthening global economy and reviving domestic demand support the revitalization,” Annika Lindblad, economist at Nordea Bank AB, wrote in a report before the release. “The economic environment has improved faster than expected, largely due to a recovery in the global economy and commodity prices.”

BRIC

The four so-called BRIC economies are leading the global recovery, with growth in China exceeding 10 percent. The world’s second-largest economy expanded an annual 11.9 percent in the three months through March. Brazilian output grew 4.3 percent in the fourth quarter while the economy of India expanded an annual 6 percent in the same period. Brazil and India have yet to release first-quarter GDP data.

The recovery is gaining steam as some of Russia’s biggest companies rebound from last year’s slump. Sales at OAO AvtoVAZ, the country’s largest carmaker, are rising while commodity producers OAO Severstal and OAO Mechel have increased output.

Businesses are benefitting from record-low borrowing costs as banks resume lending. The central bank has cut its main interest rates 13 times in as many months to spur credit flows, helping manufacturers and driving household confidence. Lending may grow 15 percent this year, bank Chairman Sergei Ignatiev said on April 9.

Ruble

The ruble slipped 0.3 percent against a basket of dollars and euros to trade at 33.5853 at 4:31 p.m. in Moscow. Russia’s RTS Index of the country’s 50 most-traded stocks was trading 2.1 percent lower, after a 55 percent gain over the past 52 weeks.

The ruble’s real rate is back at pre-crisis levels, Nabiullina said today.

“The Russian economy will continue to recover rapidly in 2010 and 2011,” said Odd Per Brekk, the International Monetary Fund’s senior representative in Russia. Europe’s rescue package, worth almost $1 trillion, designed to counter a spreading debt crisis “has increased the upside potential” to the IMF’s forecast for 4 percent growth in Russia’s GDP, he said.

A return of economic growth won’t prevent inflation from easing to 5 percent this year, central bank First Deputy Chairman Alexei Ulyukayev said. That compares with a 12-year low of 6 percent in April. The economy may grow more than 5 percent this year, while the country’s budget deficit probably won’t exceed 5 percent of GDP, according to Ulyukayev.

An 88 percent surge in Urals crude prices since the end of 2008 allowed the government last year to increase spending by 27.3 percent. Oil averaged more than $75 a barrel in the first quarter, 70 percent more than during the same period last year.

Energy Boost

Income from oil and gas, which account for about 25 percent of GDP, reached 1.1 trillion rubles in the first four months, or 36 percent of the government’s target for the year, Finance Ministry data show.

Russia earns $2 billion in extra revenue every time the price of oil rises by $1, Deputy Finance Minister Dmitry Pankin said last month. The budget deficit may be between 5.2 percent and 5.4 percent of GDP this year, Finance Minister Alexei Kudrin said in Moscow today. That compares with the government’s latest official forecast for 6.8 percent.

If oil continues to average higher than $70 a barrel, the deficit may narrow to 4 percent in 2011, Kudrin said. Crude will probably average $76 a barrel this year and next, Nabiullina said.

Higher incomes, a revival in bank lending and stabilizing unemployment are boosting consumer confidence and spending. Consumer demand rebounded last quarter, Nabiullina said. The Economy Ministry said on April 29 it may raise its official forecast for economic growth this year to 4 percent from 3.1 percent.

Last year’s record economic slump, which President Dmitry Medvedev has called the “hardest year” since the country’s 1998 default, pushed the government into its first budget shortfall in a decade.

Unsafe roads annually cost $34 billion to Russia – World Bank

WASHINGTON, November 29 (Itar-Tass) -- Unsafe road traffic conditions in the countries of Europe and Central Asia have tremendous adverse implications for their economic and social well-being, the World Bank said.

“Road traffic injuries are already among the top ten causes of death and disability in Europe and Central Asia and the trend is worsening,” said Abdo Yazbeck, World Bank Health Sector Manager for the Europe and Central Asia. “Human impact of traffic crashes is enormous. Families are being driven into poverty because of the death of their breadwinner or the mounting costs of medical care and rehabilitation for accident victims. But the growing magnitude of the problem is also bringing a national dimension to it, contributing to the demographic crisis and imposing additional burdens on country economies which lose billions of dollars every year as a result of traffic injuries and fatalities”.

In Europe and Central Asia, the highest estimated annual costs to governments are in the large economies that also have sizeable populations: Russia ($34 billion per year), Turkey ($14 billion), Poland ($10 billion), and Ukraine ($5 billion). A combination of weak road safety management capacity, deteriorated roads, unsafe vehicles, poor driver behavior, and patchy enforcement of road safety laws, alongside exponential growth in the number of vehicles, are the key factors contributing to road traffic injuries and fatalities multiplying at a rapid pace, the World Bank said.

Humor - investing in Gold

Pros and cons of investing in gold.

To Russia (Without Love)

Maybe Mother Russia is still gloating over the Georgia affair, but its show of military might was not so tactical for its economy, where the smart money is leaving in droves (read: at a rate rivaling the 1998 ruble crisis). Is this only the beginning, or is the worst mostly over? (Note: don’t miss the “million-headed hydra of the bourgeoisie” quote in the story after the jump. So necessary.)

Investors pulled their money out of Russia in the wake of the Georgia conflict at the fastest rate since the 1998 rouble crisis, new figures showed on Thursday.
Russian debt and equity markets have also suffered sharp falls since the conflict began on August 8, with yields on domestic rouble bonds increasing by up to 150 basis points in the last month.

The moves come as President Dmitry Medvedev faces pressure from business leaders concerned that the impact of the global credit crisis is starting to be felt in Russia.

Credit conditions are to be discussed at next month’s “summit of oligarchs”, the Russian Union of Industrialists and Entrepreneurs meeting that former President Vladimir Putin held annually to discuss economic issues.

Vladimir Potanin, head of Interros, one of Russia’s largest industrial groups, has complained about the shortage of long-term credit to Mr Medvedev, the financial newspaper Vedomisti reported on Thursday.

More at http://www.ft.com/cms/s/0/60abb0d4-6fb1-11dd-986f-0000779fd18c.html