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“NATAKHTARI BREWERY”

In 2005, as the result of attraction of unexampled


investment from “TBC Bank” and “EBRD”, was
constructed and launched “NATAKHTARI BREWERI”,
equipped with ultra-modern technologies.

Several favorable factors: ecologically safe environment,


proximity from the Capital and, primarily, unique and rare
qualities of Natakhtari water preconditioned construction
of the brewery there.

We can say without exaggeration, that “Natakhtari


Brewery” is owing to innovative technologies, modern
forms and methods of management, it has no analogue in
South Caucasus.

Lab equipped by latest technological equipment ensures


safeness of “NATAKHTARI” production.

Pickings clean by means of ionized air and ultra-violet


rays. Plastic bottles have a special protective film that
preconditions safeness of the production from dangerous
admixtures and guarantees prolonged shelf life.

Excellent raw materials and skillful operations of technical


staff determine quality of “NATAKHTARI” brewery.
“NATAKHTARI BREWERY” adheres to well known German
canon of brewing: they brew beer only from malt and
water, without any chemical adding.

BEER PREPARATION

Beer is prepared from the following: malt,hops,water and leaven.

We can divide its preparation on three parts:

1. In sequence of boiling of malt and adding hops,they receive


molasses/syrup,which is necessary for the brewing process.
2. Cooled molasses /syrup goes to boilig section where they add to it leaven.
After fermentation,beer proceeds to the ageing stage. During these
processes,special attention should be paid to temperature and pressure.
3. Then we receive tastful beer,which after filtration is ready for
consumption.

Product

A new brand – 3D

During the recent period NATAKHTARI


BEWERY
company faced the considerable demand of
teeming
beer. This fact encouraged the company to create new
product “tride”, therefore created a great opportunity
for business to extend through youth.

The name of this brand is different and international at the same


time. It means 3 dimentios and this emphasizes the new style of
beer consumprion, culture, up-to-dateness. Natakhtari wishes to
show to public more in beer than only product and minimize the
exosting stereopypes about Georgian beer.

Mode of entry & Expansion strategy

Export

The form of international business activity we chose is direct export because it is


easier to transport already done production, then for example build new factory in
Kazakhstan for producing beer there. Firstly, because it will take long time.
Secondly, we are going to export only “Tride” beer, one product of “Natakhtari
Brewery” and not all kinds of beers that this factory produces. “Tride” beers
segment is youth, and we think that this product will be attractive for
Kazakhstanian young people.

Home replication

The company’s welfare, in this case exporting it’s production in


Kazakhstan,depends on the question: how to gain and sustaining competitive
advantage? To answer this question and expand the business profitable we have to
choose the correct strategic alternatives. As our advantage is product’s quality
and the specific segment for which th product is created, we will attempt to
duplicate our home strategy and use specific advantages of “Natakhtari” as our
main weapon. Concentrating on lower prices will give us a chance to be more
compatible. So we believe that “our path to success internationally is the same as
it is domestically.”

Market research and analysis

Capital Astana
Official language Kazakh (state)
Russian (official)
Government: Presidential Republic

Area: total: 2,724,900 sq km


1,052,085 sq km
water: (%)1.7
Ethnic groups
67.4% Kazakh
25.9% Russian
3.7% Ukrainian
2.5% Uzbek
2.4% German
1.7% Tatar
6.4% others[1]

Currency Tenge (T) (KZT)

Geographic location

The Republic of Kazakhstan, is a large Eurasian country in Central Asia and


Eastern Europe. Ranked as the ninth largest country in the world as well as the
world's largest landlocked country,[5][6] it has a territory of 2,727,300 km² (greater
than Western Europe). It is bordered by Russia, Kyrgyzstan, Turkmenistan,
Uzbekistan and China. The country also borders on a significant part of the
Caspian Sea. With an area of 2.7 million square kilometers (1.05 million sq. mi),
Kazakhstan is the ninth-largest country in the world and the largest landlocked
country in the world. It is equivalent to the size of Western Europe. It shares
borders of 6,846 kilometers (4,254 mi) with Russia, 2,203 kilometers (1,369 mi)
with Uzbekistan, 1,533 kilometers (953 mi) with China, 1,051 kilometers (653 mi)
with Kyrgyzstan, and 379 kilometers (235 mi) with Turkmenistan. Major cities
include Astana, Almaty, Karagandy, Shymkent, Atyrau and Oskemen. While
located primarily in Asia, a small portion of Kazakhstan is also located west of the
Urals in Eastern Europe.

The climate is continental, with warm summers and colder winters. Precipitation
varies between arid and semi-arid conditions.

Culture

Before the Russian colonization, the Kazakhs had a well-articulated culture based
on their nomadic pastoral economy. Although Islam was introduced to most of the
Kazakhs in the fifteenth century, the religion was not fully assimilated until much
later. As a result, it coexisted with earlier elements of Tengriism. Traditional
Kazakh belief held that separate spirits inhabited and animated the earth, sky,
water and fire, as well as domestic animals. To this day, particularly honored
guests in rural settings are treated to a feast of freshly killed lamb. Such guests are
sometimes asked to bless the lamb and to ask its spirit for permission to partake of
its flesh. Besides lamb, many other traditional foods retain symbolic value in
Kazakh culture.

Traditional moral values of Kazakhs are respect of the elders and hospitality to
strangers.
In the national cuisine, livestock meat can be cooked in a variety of ways and is
usually served with a wide assortment of traditional bread products. Refreshments
often include black tea and traditional milk-derived drinks such as ayran, shubat
and kymyz. A traditional Kazakh dinner involves a multitude of appetisers on the
table, followed by a soup and one or two main courses such as pilaf and
beshbarmak. They also drink their national beverage, which consists of fermented
mare's milk.

It is very suprising that there are no problems with alchohol in Kazakstan, despite
it being half muslim.

The Kazakh people are rich in traditions. From birth through old age and death,
every step of their lives has historically been marked with celebration. Even their
funeral ceremonies have their own special symbolism.
Unfortunately, many rich and interesting traditions and customs of the Kazakh
people have been forgotten throughout the past century. Real sovereignty is just
now being reestablished in Kazakhstan due to the process of democratization.
These abandoned traditions are just now being rediscovered by the Kazakh people.
These traditions include being respectful to old people; being patriotic to the
motherland; being honest; and learning to love mankind.

Class and Castes. Some would argue that there is no bigger problem in
Kazakhstan than rising social stratification at all levels. Kazakh capitalism has
been a free-for-all, with a few people grabbing almost all of the power regardless
of who suffers.

The terms "New Kazakh" or "New Russian" have been used to describe the
nouveau riche in Kazakhstan, who often flaunt their wealth. This is in contrast to
the vast number of unemployed or underpaid. A culture of haves and have-nots is
dangerous for a country composed of many different ethnic groups used to having
basic needs met regardless of who they were or where they came from. Poverty
and accusations of unfair treatment have raised the stakes in tensions between
Kazakhs and non-Kazakhs, whose interactions until recently have been peaceful.

Symbols of Social Stratification. The symbols of stratification in Kazakhstan are


much like they are in many developing countries. The rich drive expensive cars,
dress in fashionable clothes, and throw lavish parties. The poor drive old Soviet
cars or take a bus, wear cheap clothes imported from China or Turkey, and save for
months just to afford a birthday party or a wedding.

Economy
Kazakhstan's economy grew by 8.5% in 2007. Gross domestic product (GDP)
grew 10.7% in 2006, 9.7% in 2005, 9.6% in 2004, 9.2% in 2003, and 9.5% in
2002.

Kazakhstan's monetary policy has been largely well managed. However, in 2007,
rapid increases in global commodity prices helped push inflation rates as high as
18.8%. Prior to this, inflation had remained relatively steady at 9.5%, up from
8.4% in 2006. Inflation from 2002-2004 was 6.6%, 6.8%, and 6.7%, respectively.
Because of its strong macroeconomic performance and financial health,
Kazakhstan became the first former Soviet republic to repay all of its debt to the
International Monetary Fund (IMF) in 2000, 7 years ahead of schedule. In March
2002, the U.S. Department of Commerce graduated Kazakhstan to market
economy status under U.S. trade law. The change in status recognized substantive
market economy reforms in the areas of currency convertibility, wage rate
determination, openness to foreign investment, and government control over the
means of production and allocation of resources.

Oil and gas is the leading economic sector. Production of oil and gas condensate in
Kazakhstan amounted to 67.2 million tons in 2007, an increase from 64.5 million
tons in 2006. Kazakhstan exported 60.2 million tons of oil and gas condensate in
2007. Natural gas production in Kazakhstan in 2007 amounted to 16.6 billion cubic
meters. Kazakhstan holds about 4 billion tons of proven recoverable oil reserves
and 3 trillion cubic meters of gas. Industry analysts believe that planned expansion
of oil production, coupled with the development of new fields, will enable the
country to produce as much as 3 million barrels per day by 2015, lifting
Kazakhstan into the ranks of the world's top 10 oil-producing nations.
Kazakhstan's 2005 oil exports were valued at $17.4 billion, representing over 70%
of overall exports. Major oil and gas fields and their recoverable oil reserves are
Tengiz (7 billion barrels); Karachaganak (8 billion barrels and 1,350 billion cubic
meters of natural gas); and Kashagan (7-9 billion barrels). Starting in 2004, the
Government of Kazakhstan increased its take of oil deals by increasing taxation of
new oil projects. In 2007, the government amended the "Law on Subsoil and
Subsoil Use." The amendments give the government the right to annul or amend
subsoil contracts if the contracts pose a danger to the country's national economic
security interests. The government insisted it would not use the amendments
retroactively to annul existing contracts.

Natural Resources
Kazakhstan has an abundant supply of accessible mineral and fossil fuel resources.
Development of petroleum, natural gas, and mineral extraction has attracted most
of the over $40 billion in foreign investment in Kazakhstan since 1993 and
accounts for some 57% of the nation's industrial output (or approximately 13% of
gross domestic product). According to some estimates,[23] Kazakhstan has the
second largest uranium, chromium, lead, and zinc reserves, the third largest
manganese reserves, the fifth largest copper reserves, and ranks in the top ten for
coal, iron, and gold. It is also an exporter of diamonds. Perhaps most significant for
economic development, Kazakhstan also currently has the 11th largest proven
reserves of both oil and natural gas.[24]

In total, there are 160 deposits with over 2.7 billion tons of petroleum. Oil
explorations have shown that the deposits on the Caspian shore are only a small
part of a much larger deposit. It is said that 3.5 billion tons of oil and 2.5 trillion
cubic meters of gas could be found in that area. Overall the estimate of
Kazakhstan's oil deposits is 6.1 billion tons. However, there are only 3 refineries
within the country, situated in Atyrau, Pavlodar, and Shymkent. These are not
capable of processing the total crude output so much of it is exported to Russia. In
2006, Kazakhstan was producing approximately 1,426 million barrels
(226,700,000 m3) of oil and 23.5 billion cubic metres of natural gas annually.

Foreign Relations
Kazakhstan has stable relationships with all of its neighbors. Kazakhstan is a
member of the United Nations, Organization for Security and Cooperation in
Europe, and North Atlantic Cooperation Council, and will serve as chairman in
office of the Organization for Security and Cooperation in Europe in 2010. It also
is an active participant in the North Atlantic Treaty Organization's (NATO)
Partnership for Peace program. Kazakhstan also is a member of the
Commonwealth of Independent States and the Shanghai Cooperation Organization
along with Russia, China, Kyrgyzstan, Tajikistan, and Uzbekistan. Kazakhstan,
Russia, Belarus, Kyrgyzstan, and Tajikistan established the Eurasian Economic
Community in 2000 to re-energize earlier efforts at harmonizing trade tariffs and
the creation of a free trade zone under a customs union. Kazakhstan is the founding
member of the Conference for Interaction and Confidence in Asia. Kazakhstan also
engages in regional security dialogue with ASEAN (Association of South East
Asian Nations).

Business Customs
In terms of business customs, Kazakhstan is more European than Asian. It is
customary to shake hands and call people by their first names at business meetings,
as well as at informal get-togethers. However, men generally do not shake
women's hands in company. Business attire is generally a suit and tie for men and a
suit or business dress for women. Small gifts--pens, company logo pins, memo,
and books--are frequently given at the end of an initial meeting as a token of
appreciation. Business cards are the norm, often in both Russian and English.

Kazakhstani business people are generally less direct than American business
people, and what can be accomplished in a few meetings in the United States
might take more in Kazakhstan, requiring patience and discipline on the part of the
U.S. business people. An experienced and competent interpreter can add
invaluable context to your business meetings.

It is common in Kazakhstan to have dinner with business contacts, but usually only
after establishing business contacts in a more formal setting. Business attire is
worn. Usually diners share a bottle of vodka or cognac and offer toasts, stating
their desire for a fruitful business relationship and warm personal relations
between partners. After-hours informal meetings, dinners and toasts, as well as
weekend hunting and barbecues can be very important to forge business relations.

Kazakhstan beer market

Beer is the most popular alcoholic drink in Kazakhstan, with the domestic market
experienced booming growth in recent years. Kazakhstan has attracted
considerable attention from international brewers for it is seen as one of the CIS
region's best-performing economies due to a commendable post-independence
reform effort, coupled with sound fiscal and monetary policies, which has led to
enviable levels of economic growth and rising disposable incomes. Another factor
has been the government’s recent acknowledgment that there is a need to diversify
its economy to reduce its dependency on energy exports, which provides
opportunities for investors in other industries, such as alcoholic drinks.

Today Kazakhstan beer market can be named the most dynamical on the Postsoviet
area. The last five years the consumption of beer in this republic grows with high
rates, the foreign investors come, there is manufacture modernization. In our
survey we shall examine the Kazakhstan brewing branch development, estimate
the prospects and will try to give the forecast of its development.

Market development
The beer market of Kazakhstan appeared in the second half of IX, when first
factories were built. During soviet times, about 30 mln. dal of beer produced in the
country. In 90th years of the last century, the production volumes of beer
decreased five times as a result of an economics slump. The brewing trade dropped
behind in technical development of beer making technology, the plants weren’t
able to brew high-quality beer, catered for market needs.

First of all, analyzing the reasons of high growth rates, we shall note, that in 1996
in average only 6 liters of beer annually needed on one inhabitant of Kazakhstan.
The brewing branch crisis during the economic reforms, connected with practically
fivefold falling of the consumption level was one of the deepest among the former
union republics…

The second wave of recession in the branch was connected to the aggravation of an
economic situation. The crisis continued during 1992 — 1996 when the
manufacture was reduced on average up to 27% annually, and in 1996 6,3 million
dal of beer was produced…

Chart. Beer production in the Republic of Kazakhstan for 1995-2004,


thousands dal

A turning point for the Kazakh economy as a whole is 1995-1997. Mainly, the
economic rise of the country was connected to the escalating volumes of petroleum
export which development program now provides stable growth rates of gross
national product at the level of 10-11% and a low rate of inflation to the republic.

For all markets the tendency when the beer branch overtakes the average indicator
of the manufacture growth is usual. At the same time for Kazakhstan...

Nevertheless, the growth of well-being level of the Kazakhstan population and as


the consequence the growing consumption of beer gave a push for engaging
internal and external investments in beer branch which, since 1996, develops
extensively and fast enough…

BOP

Strong exports of oil and minerals created trade surpluses in the early 2000s. Large
amounts of foreign direct investment have also aided the country's balance of
payments situation. Kazakhstan floated its currency, the tenge, in 1999, resulting in
a devaluation. Subsequently, exports recovered and there was a fall in imports, and
the currency stabilized against the dollar.
The US Central Intelligence Agency (CIA) reports that in 2001 the purchasing
power parity of Kazakhstan's exports was $10.5 billion while imports totaled $8.2
billion resulting in a trade surplus of $2.3 billion.

The International Monetary Fund (IMF) reports that in 2001 Kazakhstan had
exports of goods totaling $9.1 billion and imports totaling $8.3 billion. The
services credit totaled $1.27 billion and debit $2.61 billion. The following table
summarizes Kazakhstan's balance of payments as reported by the IMF for 2001 in
millions of US dollars.

Current Account -1,416


Balance on goods 809
Balance on services -1,339
Balance on income -1,115
Current transfers 230
Capital Account -197
Financial Account 2,717
Direct investment abroad -16
Direct investment in Kazakhstan 2,763
Portfolio investment assets -1,354
Portfolio investment liabilities 32
Other investment assets 515
Other investment liabilities 778
Net Errors and Omissions -720
Reserves and Related Items -385

Government

Kazakhstan is a presidential republic. The president is the head of state. The


president also is the commander in chief of the armed forces and may veto
legislation that has been passed by the Parliament. The prime minister chairs the
Cabinet of Ministers and serves as Kazakhstan's head of government. There are
three deputy prime ministers and 16 ministers in the Cabinet. Karim Massimov has
served as the Prime Minister since January 10, 2007.
Kazakhstan has a bicameral Parliament, made up of the lower house (the Majilis)
and upper house (the Senate). Single mandate districts popularly elect 67 seats in
the Majilis; there also are ten members elected by party-list vote rather than by
single mandate districts. The Senate has 39 members. Two senators are selected by
each of the elected assemblies (Maslikhats) of Kazakhstan's 16 principal
administrative divisions (14 provinces, plus the cities of Astana and Almaty). The
president appoints the remaining seven senators. Majilis deputies and the
government both have the right of legislative initiative, though the government
proposes most legislation considered by the Parliament.

American legal and constitutional experts helped the Kazakhstani government


write their constitution and form their government in1995.

The president, Nursultan Nazarbayev, was the top Communist leader of the
Kazakh Soviet Socialist Republic when the Soviet Union disbanded in 1991. After
independence, Nazarbayev was easily elected president in November 1991. In
March 1995 he dissolved parliament, saying that the 1994 parliamentary elections
were invalid. A March 1995 referendum extended the president's term until 2000,
solidifying Nazarbayev's control and raising serious doubts among Kazakhstani
people and international observers as to the state of Kazakhstani democracy.

Multiparty, representative democracy has tried to take hold in Kazakhstan but has
been met by opposition from Nazarbayev's government. The main opposition
parties are the Communist Party, Agrarian Party, Civic Party, Republican People's
Party, and the Orleu, or progress movement. A number of smaller parties have
formed and disbanded over the years. The opposition parties have accused
Nazarbayev and his Republican Party of limiting any real power of the opposition
by putting obstacles and loopholes in their way, if not actually rigging the
elections.

The most notable example of suppression of political opposition has been the case
of Akezhan Kazhageldin, who was Nazarbayev's prime minister from 1994 to
1997. In 1999 Kazhageldin was banned from running in the 1999 presidential
elections. He and his wife were charged with tax evasion (the conviction of a crime
under the Kazakhstani constitution prevents a potential candidate from running for
office) and arrested in September 1999 at the Moscow airport after arriving from
London. Sharp criticism by the Organization for Security and Cooperation in
Europe (OSCE) over how the arrest was set up and carried out allowed
Kazhageldin to return to London. The end result was that he was still not registered
for the October election, and Nazarbayev won easily, with more than 80 percent of
the vote. The OSCE and the United States criticized the election as unfair and
poorly administered.
Legal System

The legal system of Kazakhstan owes its origin to the Continental (Roman-
German) legal family. The Constitution, respective normative legal acts,
international treaties, as well as the normative resolutions of the Constitutional
Council, and Supreme Court of Kazakhstan constitute the actual law in
Kazakhstan. The international treaties ratified by Kazakhstan generally have
priority over its laws and, such treaties can either apply directly/automatically, or,
after the adoption of a law where the treaty itself provides that, for its application,
a law must be adopted.
Each of the regulatory legal acts of a subordinated level must not contradict
regulatory legal acts of the higher levels. All regulatory legal acts shall have
direct/automatic effect, unless it is otherwise stipulated in the regulatory legal acts
themselves, or in acts regulating their entering into force.
The powers of the legislature are severely limited; most glaringly, they don't
even have the power to initiate legislation. The legal system is based on the civil
law system. There is a Supreme Court of forty-four members and a Constitutional
Court of seven members. While much of the control is centered in Astana with the
president, legislature, and courts, there are fourteen provinces or states, called
oblasts in Russian, with governors and certain rights.
Mission Statement

1. The best deals for Kazakh customers of beer (especially young people).
2. Better quality beer
3. Competitive costs
4. More innovation and prestige

SWOT Analys

STRENGTHS WEAKNESSES

Loyal Consumers Narrow Line of


Assortment

Strong Brand Low share of


Sales in whole
realization
Innovative Campaigns
Uncontrollable price
High Awareness

OPPORTUNITIES THREADS

Increase Market Share Governmental


Restrictions

Increase Consumption per Capita Heavy


Competiotion

Compete Other Brands Entering Market Political Enviroment

Segmentation
For the beer “3D”, the target market is Segment of 18-30, because the Brand is
positioned like the beer for young generation. Also this segments is very active,
they go to bars, night clubs etc. that’s why we have a greater opportunity to reach
them (By placing the ads in night clubs,bars,cafes)

Marketing plan

Our product “Tride” beer will first appear in to small super markets and the

volume of supply will be 150 000 bottles and on the bottles there will be hang

small booklet in English and Kazakh and Russian languages with briefly

information about “Natakhrati Brewery” history and also about its unique way of

preparing.

List of our competitors looks like this: Prices in $

Brewers Union of Kazakhstan 0.34

Efes in Kazakhstan 0.34

BBH in Kazakhstan 0.4

Heineken in Kazakhstan 0.34

«Perviy Pivovareniy Zavod» JSC 0.4

«Schymkentpivo» JSC 0.34

«Rosa» JSC 0.23

«Vostok — beer» Ltd 1.3

«Atameken and Co» Ltd 1.77

«Araj» JSC 1.5

«Ust-Kamengorodsky brewery» JSC 1.55


«Arasan» Ltd 1.7

Our products price on the market will be around 0.30 $

Finance management

Transportation cost For 25000 Bottles (1600 boxes -0.5 litre)

Destination : Tbilisi - Almaty

Price Includes:

1. Terminal Fee in Georgia


2. Terminal Fee in Kazakhstan
3. BAF (Bunker Adjustment Factor)
4. CAF (Curerncy Adjustment Factor
5. Documentation Expenses
6. Freite

Transportat
ion Costs Selling Marg
Bottles Litre Cost per unit Price in
$ $ $
Small 0.50 L 0.16 0.04 0.30 48%

Operations management

For the first time we are going to supply Kazakhstanian market with a batch of

150,000 liters of Tride beer.


According to the geographical locations of Georgia and Kazakhstan, foreseeing the

speed of delivery, the best way of transportation is to deliver “Tride” by trailer

trucks. The truck can transport 25 tons so 6 trucks will be needed. The cost of a

truck will be not more then 4000 US dollars including both rent and transportation

expenses.

We also need warehouse to keep our goods before supplying retailer stores. Rent

expense will be about 1200 US dollars, which is affordable and when increasing

the volume of business it will become cheaper raletively to volume.

Thank you for attention!