Finance

CFO interview: ‘Customers rebuilt their confidence in our products.’

October 27, 2015

After years of focusing on a company turn-around, the Banja Luka Brewery now is on the path of growth. The company invests in new products, like Radler. CFO Mirjana Jovanovic is confident about the future of the company.

The Banja Luka Brewery from Bosnia and Herzegovina has had a rough few years. The brewery was founded in 1873 by monks of the monastery ‘Marija zvijezda’ in order to produce beer for their own purposes, and has since changed form and developed along with the market. Positioned as a growing regional brewery, investing in capacity expansion, it started facing trouble in year 2001, says CFO Mirjana Jovanovic.

“Multinationals started buying breweries in the neighboring countries and entered the market aggressively. Our turnover was cut in half. In the years after we were fighting for survival.” Banja Luka Brewery (in Serb: Banjalučka pivara) was bought by an investment fund in 2006. “The idea they had was to recover the turnover and sell the company fast. But that took longer that thought before, and their strategy has changed since. The investment company is still holder of the brewery.”

Growth path again

Things started moving slowly in 2009. “We are on the growth path again. The first years it was a small growth, almost invisible due to a spike in raw materials and energy prices. 2012 is the year we see as the year everything turned around.  It was the year in which we gave it all out, refreshed our brand, offered superior product, and we won a lot of our market share back. Customers regained their confidence in our products.”

It was an exciting decade for the brewery. “This year we expect an annual turnover of 20 till 22 million euros. To break even we have to sell 400 hectoliters of beer. In the years things went bad, we sold only 30 percent of the total capacity of 1 million hectoliters.” 

Growing in other countries is difficult for the brewery. “We export a little to Croatia or other European countries. But the transport costs are quite high, and non-customs barriers numerous, especially in the neighboring countries, which makes export hard. Various delays caused by these add on almost 15 to 20 percent of the total costs. Marketing for a regional brewery vs. the multinationals in those countries is especially challenging. That makes it hard to compete in these countries.” Jovanovic would like that her own country Bosnia also would do the same. “The borders of Bosnia are basically open to everybody, making it easy for any company from abroad to sell their products here. The same does not apply for our companies trying to export.”

Focus on growth

It’s one of the things Jovanovic would like that the government would change. “Bosnia is about politics. I wish the authorities focused more on economy and less on pure politics, as without this shift I don’t expect our economy to grow much.” 

The brewery’s focus now is on growth much more than cutting costs. “There is still room for improvements in utility management, and we are thinking about ways to decrease water and energy consumption. “

“Keeping up with the consumers is crucial.  To grow in the beer market, which is expected to be stable, even shrinking a bit, we have to develop new products, such as Radlers, and expand out of the traditional beer segment. When developing products like this, we only produce the best, as we have to compete on quality. This has resulted in increased sales, we even gained some share of Coca Cola segment.” 

Turning the loss into growth also meant that the company had to change from within. “We were so focused on defending, it took some time to switch to the offensive. We are now learning to grow, and if things keep going well we expect to be the number one brand in Bosnia soon.”

This CFO Profile interview has been done because of the quarterly CFO Survey. CFO Survey Europe is an initiative of TIAS School for Business and Society and Duke University.

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