Christian Ramm-Schmidt President and CEO of BBH

16 June 1999

1 16.06.99 13:43 Agenda

 Introduction  Strategy  Development in Russia, Ukraine and the Baltic States  Outlook

2 16.06.99 13:43 BBH

 Swedish registered company located in Stockholm − Established jointly by Hartwall and Pripps in 1991  BBH has expanded rapidly since 1991  Interests in eleven breweries and eight malteries in Russia, Ukraine and the Baltic States  Leading player on the brewery markets in this region

3 16.06.99 13:43 BBH - Ownership structure

Pripps Hartwall Ringnes

50% 50% BBH

Russia Ukraine Baltic States

Breweries Baltika (74%) Slavutich (70%) Kalnapilis (86%) - Don Pivo (83%)* Kolos (92%)** (50%) - Lithuania Yarpivo (53%) Aldaris (75%) - Latvia Taopin (69%) Saku (75%) - Estonia Chelyabinskpivo (75%**)

Malteries Baltika (30%) Slavuta (66%) Litmalt (50%) - Lithuania Yarpivo (100%) Kolos (100%) Utenos (100%) - Lithuania Taopin (100%) Chelyabinskpivo (100%**)

* Owned by Baltika ** After agreed ownership increases 4 16.06.99 13:43 BBH - A Successful Strategy  Acquire majority interests in local breweries − Local brands − Local management − Local ownership  Quality improvements − Modern technology − of western quality − Extensive personnel development  Support from BBH in marketing, sales and distribution  Brand strategy with focus on main stream quality segment  Volume growth through capacity expansion  BBH “Family concept”

6 16.06.99 13:43 BBH - Sales volumes 1991-1998

Million litres 913

639

460

202 160

74 14 33

1991 1992 1993 1994 1995 1996 1997 1998

Saku Aldaris Baltika Kalnapilis Yarpivo Slavutich Taopin

7 16.06.99 13:43 BBH - Development 1991-1998

Operating income (SEK million) Operating profit (SEK million)

4 000 3 605 1200 1 066 3 500 1000 936 3 000 2 732 800 2 500

2 000 600

382 1 500 1 245 400

1 000 615 200 161 78 335 500 -4 -17 118 3 1 22 0 0 91 92 93 94 95 96 97 98 91 92 93 94 95 96 97 98 -200

8 16.06.99 13:43 Beer markets 1997 and 1998 Total beer markets Per capita consumption

3 500 Million litres 131 127 Litres per 1997 capita 1998 114 2 850 108 1997 104 99 1998

8179

62 58 53 51 47 44 39 40 2931 604 550 23 546 514 417 408 17 14 238 225 12 136147 60 6971 74 UK Latvia Russia Latvia Estonia Ukraine Russia Finland Estonia Ukraine Lithuania Norway Sweden Denmark Lithuania Germany

9 16.06.99 13:43 A changing environment

 Increased competition − New foreign entrants in all markets − Acquisition prices go up  Differentiation of prices and packaging − Cheap segments grow − Does quality pay off ?  Control over distribution including consumer pricing

10 16.06.99 13:43 Market trends first four months

Market BBH Litres growth market per share capita 1998-99 1999 Year 1998 Russia + 22 % 20 %* 23 Ukraine + 7 % 13%** 12 Estonia + 22 % 50 % 47 Latvia + 17 % 42 % 31 Lithuania + 11 % 37 % 44 * Including Chelyabinskpivo, acquired January 1999, ownership will increase to 75% ** Including Kolos, ownership will increase to 92%

11 16.06.99 13:43 Volume growth BBH’s breweries first four months

Change Year Million litres 1999 1998 1998-99 1998 Russia 222 173 + 28 % 699 Ukraine 21 19 + 8 % 78 Baltic States 44 37 + 19 % 136 BBH total 287 229 + 25 % 913

Chelyabinskpivo and Kolos are not consolidated

12 16.06.99 13:43 BBH - First four months 1999 1.1. - 30.4. 1.9.-31.12. Year SEK million 1999 1998 1998 1998

Operating income (100%) 748 1,043 792 3,605 Operating profit (100%) 133 339 126 1,066 Operating margin 18% 33% 16% 30%

Volume in million litres (100%) 287 229 292 913

Total assets - SEK b. (100%) 4.0 RUB/USD Average exchange rate 24 6.1 17.7 9.7

 25% volume growth  Average price increase still lower than inflation  Strong market leadership in most markets  Increased competition

13 16.06.99 13:43 Russia Beer market 1998  Market leader in Russia − However, merger of SUN and Interbrew has significantly narrowed the gap  Other BBH is logistically very well 61 % located in Russia  BBH* Fragmented industry undergoing 21 % restructuring − More than 200 breweries, the 20 biggest accounting for around 60% of total SUN capacity Ochakova Interbrew 4 % 14 %  Low beer consumption − 23 litres per capita - Population of 150 million Total beer market 3,500 million litres − Rapid growth * Excluding Chelyabinskpivo (market

14 16.06.99 13:43 share 2%) Ukraine Beer market 1998  Slavutich is Ukraine’s leading quality beer Other 43 %  8% volume growth in T1 1999  Fragmented market with more than 100 breweries Obolon  Tax reduced from 1 January 20 % 1999

Donetzk 11 % Rogan Slavutich* 13 % 13 %

Total beer market 604 million litres * Excluding Kolos (marketshare 3%)

15 16.06.99 13:43 Lithuania Beer market 1998  Market leader with two breweries − Utenos Alus on a rising trend, No. 1 in Tauras Others May 9 % 14 %  Volume increased by 31% in T1 Ragutis − Consolidation of Utenos Alus 11 % − Launch of quality beer  Market growth 11% in T1  Valuable synergy gains from Svyturis coordination between Kalnapilis 22 % Kalnapilis Utenos and Utenos Alus Alus 44 %

Total beer market 147 million litres

16 16.06.99 13:43 Latvia Beer market 1998  Leading market position

 Aldaris Others − Lost market share to cheap beer segment 32 %  Beer consumption in Latvia increased by 17% in T1 − Increased import of beer, mainly plastic Riga bottles 8 %  Relatively low beer consumption Varpa compared to Estonia and 9 % Aldaris Lithuania 50 %

Total beer market 74 million litres

17 16.06.99 13:43 Estonia Beer market 1998  Leading market position  Others Saku - 45% volume growth in T1 23 %  Continued market growth Tartu − Increasing beer consumption 10 %  The new tax act in force from April 1999 Viru 19 %

Saku 49 %

Total beer market 69 million litres

18 16.06.99 13:43 Cost structure

 Dependence on imported raw materials is being reduced  Increased sourcing of locally produced malt  Mainly local sourcing of bottles and packaging  Equipment is imported  Building and construction are domestic

19 16.06.99 13:43 BBH - Malteries

Maltery Country Owner Capacity (tons) Litmalt Lithuania Lahden Polttimo/Kanapilis (50/50) 10 000 Utenos Lithuania Utenos Alus 15 000 Slavuta Ukraine BBH (66%) 90 000 Kolos Ukraine Kolos 6 000 Baltika* Russia Soufflet/Baltika (70/30) 105 000 Yarpivo Russia Yarpivo 15 000 Taopin Russia Taopin 15 000 Chelyabinsk Pivo Russia Chelyabinsk Pivo 12 000 Total 268 000

* From 1999/2000

20 16.06.99 13:43 BBH distribution system in Russia

Brewery Distribution centre

St. Petersburg •

•Vologda • Yaroslavl Moscow Tula• • •N. Novgorod Kursk Rostov- • Voronezh on-Don • Ekaterinburg • Saratov • Samara • • Chelyabinsk • Krasnodar Volgograd Sochi• Novosibirsk•

21 16.06.99 13:43 BBH distribution system in Ukraine

 Kiev Slavuta  Harkov

Lvov  Lugansk

 Donetsk

Zaporozhye

 Brewery Odessa

 Distribution centre

 Sevastopol 22 16.06.99 13:43 Investments

 Invested SEK 3.4 billion since 1991 and SEK 1.6 billion in 1998  Extensive investment programmme to be completed in 1999  Further investments in existing breweries in year 2000 to expand capacity and improve quality

23 16.06.99 13:43 BBH - Strategy

 Further develop its leading market position in Russia  Consolidate its positions in the Baltic States  Become a market leader in Ukraine  Primarily concentrate on developing existing breweries  New acquisitions to secure geographical coverage in the most highly populated areas  A driving force in our markets  Owners have a long-term commitment

24 16.06.99 13:43 Short term outlook

 Pressure on margins, lower profit  Increasing competition  Volumes expected to grow  Challenging balance between price increases and volume growth  Change in consumption patterns - shift from vodka to beer

25 16.06.99 13:43 Long term outlook  Belief in long term development  Modern local breweries with − strong brands − strong market positions − high quality beer − functional distribution − good local management  Growth in per capita consumption, but from a low level  Further consolidation, increasing competition  Thorough understanding of the business environment i Eastern Europe since 1991  High risk region - occasional setbacks are not unlikely

26 16.06.99 13:43 BBH’s breweries Brewery Country Share- Year Sales Market holding acquired volume share T1 Year 1.1-30.4 April 1999 1998 1999 1999 Saku Estonia 74 % 1991 41 13 50% Aldaris Latvia 75 % 1992 49 14 42% Baltika Russia 74 % 1993 497 142 12% Kalnapilis Lithuania 86 % 1994 46 10 22% Yarpivo Russia 53 % 1996 131 45 4% Slavutich Ukraine 70 % 1996 78 21 11% Taopin Russia 69 % 1997 83 37 3% Don Pivo* Russia 83 % 1997 - BBH Consolidated 1998 913 Utenos Alus Lithuania 50 % 1997 23 7 15% BBH Consolidated 1999 287 Kolos Ukraine 92%** 1998 17 5 2% Chelyabinskpivo Russia 75%** 1999 47 18 1% BBH Total 1,000 310

* Owned by Baltika (83%), included in Baltika’s figures ** After agreed ownership increases 27 16.06.99 13:43