"Of companies headquartered in Kyiv, Obolon is one of the largest contributors to the state budget."

"During the early 1990's, Obolon beer and Kviysky torte were novelties enjoyed by people who visited the city. Times have changed, and Obolon is not alone in the market anymore. Today, it withstands tough competition from multinational brewers like Baltic Beverage Holdings and Interbrew, who have invested in other breweries in Ukraine.

LOCAL CONTROL

Oblon beer 2000

"Obolon has resisted pressure to sell stock to outside investors, opting instead to remain wholly worker-owned." "There have been many offers by foreign companies to buy shares of our enterprise,' says CJSC Obolon President Oleksandr Slobodyan, 'However, our agenda is to stay independent and contribute to the formation of Ukrainian capital and the Ukrainian middle class. I think our employee -shareholders represent the emerging middle class in Ukraine." "According to Ukrpivo data, Obolon products occupy 24 percent of the Ukrainian beer market, followed closely by Interbrew's Rogan, Baltic Beverage's Slavutych, Chernihiv's Densa and the Donnetsk brewery. During the last year Obolon has seen its market share grow by 4 percent."

PRIVATIZATION SUCCEEDS

"The Obolon story illustrates how privatization can work for Ukraine. The brewery was one of the first to bolt the ranks of state enterprise for the private sector, but it wasn't easy. Employees initially decided to lease the brewery with an option to purchase it later. Slobodyan still thinks that the 'lease with redemption' procedure is the fairest way to transfer ownership, but when that plan fell through, employees sought full privatization. Through it all, the brewing firm always made a profit." "It was extremely hard to resist the Soviet command administrative machine,' Slobadyan said. 'We were deprived of funds, access to raw materials, and even new bottles. This repression ended only after I appealed to the vice premier. Since then we started working in market conditions."

Obolon beer Oksamytove

"In 1992, Obolon received the first license from the State Property Fund as a private enterprise, and in a year it became a closed joint-stock company with 95 percent of its shares given to employee-investors."
"For half a year, the State Property Fund ignored our intentions to be privatized,' says the tenacious Slobodyan. 'I started every working day with a visit to the SPF, and finally we made them consider it without paying a single contribution to the shadow sector.'
"About half of Obolon's workers are current shareholders, since about 1,000 new employees have joined the brewery during the past five years."
"Obolon Svitle (Light) is the brewery's least expensive and most popular type. Second-best seller Obolon Premium costs more and is being exported to the West."

"Obolon made history in Soviet times, when it became the first beer exported by the USSR. Today, about 10 percent of Obolon's production is earmarked for export to Europe, the United States, Canada and Russia. Ukrainians drink the rest."

"Obolon's largest export market is neighboring Russia, even though it recently imposed a high import tariff on beer. Even so, Obolon's presence in the Russian marketplace appears to make Russian brewers nervous, a situation Slobodyan finds curious."

"Ochakovo brewery even started an anti-dumping investigation against us. It's a bit odd since our prices are 30 percent higher than theirs,' he said."

GOAL: 'BEST IN EUROPE'

"Obolon has set its sights high. 'We want to produce the best beer in Europe,' Slobodyan says."

"To that end, the company has put significant resources into development. Every workshop has been modernized. New technologies are being incorporated, and new bottling equipment has been imported from England and Germany."

"Much of Obolon's modernization has been possible due to a $ 40 million line of credit provided through the European Bank for Reconstruction and Development (EBRD) in 1997. It remains EBRD's largest loan to a private enterprise in Ukraine."

"Obolon also pays its share of taxes, an uncommon boast in Ukraine. In 1999, the brewery sent Hr 158 million in tax revenue to the state. The ante this year will be greater, since Obolon has increased production by 43 percent over the past 10 months."

"Obolon is extending its business interests into other products and regions. It recently purchased property in Krasyliv, Khmelnitsky oblast, where it now produces mineral water that will soon appear on store shelves. Three years ago Obolon also bought a controlling interest in a Sevastopol brewery through a stock swap. The Sevastopol plant had been shuttered for two years, but now is chugging along, producing beer under three labels."
"Obolon also bought Okhtyrsky brewery in Sumy oblast and plans to revive production at Kolomyia brewery in Western Ukraine. Other acquisitions may be coming to a head. 'Small breweries are looking for (financial) support from bigger companies and they often turn to us, ' Slobodyan said."
"Obolon maintains a sophisticated infrastructure that includes shops, cafes, laboratories and barley-selection centers. Doing so costs money. "

HIGH WAGES

"Our salaries are higher than average in Ukraine. There is huge competition among those who want to work here. We are looking for those people who want to achieve something and are used to working hard. We have no space for ballast,' Slobodyan says."

"Slobodyan, 44, came to the brewery as an engineer-economist after the brewery opened in 1980. Nine years later, he was elected director at the general meeting of employees. Since he took the reigns, it hasn't experienced production declines despite hyper-inflation and various economic crises."

"Unlike gloomy Soviet-era factory bosses, Slobodyan is friendly and polite to employees. Slobodyan hasn't spend a bundle decorating his office, either. "We don't have money for euroremont,' he says. 'We put everything into the development of our products.'

"After all, he says, 'The multinational corporations are nipping at our heels."

OBOLON PAID OFF EBRD LOANS
Eastern Economist Business and Investment Weekly
April 16-22, 2001, Page 6

"KYIV...Obolon brewery paid off around 30% of its US $ 40 mn loan from the EBRD. US $33 mn of the loan was used by the brewery for modernization of equipment and improving brewing technology. The loan agreement was signed in Dec. 1997 for a five year term. (UNIAN-Biznes, Apr. 12)