THE largest beer producer and one of the biggest sponsors of Bulgarian sports is Zagorka brewery.

Privatised in 1994, Zagorka is owned by the Dutch company Heineken International and the Greek Hellenic Bottling Company (HBC) through their joint venture Brewinvest, registered in Greece.

Today, Zagorka is considered one of the most successful privatisation deals in the history of modern Bulgaria. Last year, Zagorka acquired another Bulgarian brewery, Ariana, to add another pearl to its crown.

Beginning in 1992 as a member of the management team of HBC, Dimitar Alexiev became general manager of Zagorka immediately after the privatisation in 1994 to lead it to the rank of the top beer producer in Bulgaria with over one third share of the local market.



Drinking beer, people hardly think about who owns Zagorka, but it is important to know who is behind one of the most successful privatisation deals in Bulgaria. What led to this serious investment from Greece?

Heineken International of Holland and the Hellenic Bottling Company Greece are each 50 per cent owners of Zagorka, and this leads us to the natural conclusion that this investment came from Greece. Brewinvest, according to me, is a typical example of how multi-national companies invest from countries, where they find it convenient to start any new business and countries, which have deserved the right to become investors themselves. In 1994, when Zagorka was privatised, the future in Bulgaria did not look so bright. There was no NATO and no European Union on the horizon. Therefore, we have to be thankful to such investors that were brave enough to come to Bulgaria. Naturally, this step was done through Greece, where the Balkan, and especially Bulgarian, reality is quite well known.



But Zagorka was the most popular beer in Bulgaria even before 1989. Did this make your way ahead as investors easier?

It is never easy to use a popular brand because such a brand always imposes an obligation on you. It is much more difficult to get involved with a large and popular brand in order to organise its future development. The easier thing is to just do something totally new. And to employ the big name of Zagorka and make it even bigger would have never been easy. On the other hand, of course, the brand name of Zagorka gave us advantages. But, we paid $21.7 million to buy it, paid in cash. This is a price that is equal, and even bigger, than all the money paid for all the other Bulgarian breweries. It was not easy for us to take something which was considered a focus of national pride before 1989 and keep it at this level today. Zagorka is a successful and very modern producer, which can be compared to all the medium-size breweries in Europe. Our system of quality control and management was certified under ISO back in 1997, and this was the first such certificate issued to a brewery, not only in Bulgaria but the entire Central and Eastern Europe. You see, Zagorka has only one plant, in contrast to other Bulgarian breweries that have two or more, and still Zagorka is the top beer for the third consecutive year.



Your company has always been proud of its sponsorship activities for Bulgarian sports and especially football. Zagorka committed itself to sponsoring the football championship in Bulgaria by 2006. Is that part of the national pride of Zagorka?

Yes, you can put it this way. The championship is even called Zagorka Premier League. I definitely think that football is part of Bulgaria's national pride, regardless of some of the unpleasant things we see in the local championship. Let us not forget however that all big stars of the Bulgarian national football team have started their way from this championship and they are the ones who carry the name of Bulgaria all over the world. Zagorka got involved with the football championship first through its fair-play campaign under the title "The Green Card of Zagorka". Two years after this first step, we decided that we could contribute to the entire championship by transferring the image of fair play from the green card to the premier league.



Last year you purchased another brewery - Ariana, which is another sign of your successful march throughout the industry. How do the owners of Zagorka assess their investment? Is it successful enough to them, provided the entire investment environment in Bulgaria?

They assess it quite positively. And the first reason for this of course is that for a third consecutive year, Zagorka's products have the biggest share of the market. In 2003, we had a 31 per cent share, and currently, we hold 36 to 38 per cent of the market. I have been working for the owners of HBC - Leventis Group since 1992, when they started investing in Bulgaria through Coca Cola. Leventis Group is known with its successful investments all over the world. Another success for them was the completion of the deal for Zagorka in 1994, when there was a serious competition among strategic international investors. Competitors to Brewinvest were Interbrew, Carlsberg-Tuborg, and other investors.

Unfortunately, our investors consider the fact that some things developed quite slowly in Bulgaria, like privatisation, market economy, and especially worrying are the frequent changes to legislation. But, we accept this as a growth fault. Fortunately, the beer industry itself was privatised fast and that kept it viable. However, the beer industry does not live some kind of an extraterrestrial life and it is also subject to all the positive and negative trends. The existence of certain monopolies, delays in certain developments have their impact on us, due to the lack of competition or the supplies for us. On many occasions, we were forced to deal with operations that are not typical to us, like supporting agriculture in some regions in order to provide quality raw materials for our production, instead of importing them.



So, the delayed privatisation is the main disadvantage of the Bulgarian transition?

Look, since the signing of the privatisation deal and up to now, 70 million euro has been invested in Zagorka. Meanwhile, the dividend we have paid to our shareholders leans to zero, contrary to investment as you understand. The delayed privatisation and market economy development had a negative impact on all investors, operating in Bulgaria because of the lack of normal conditions to do business. The same with the legislation changes. For example, two weeks ago the new Regulations on Packaging and Package Waste were introduced in Bulgaria. According to the regulations, you might be fined tomorrow if you dispose of a newspaper in a container, which is not for paper. Well, how many places in Bulgaria do you know, where waste separation operates? - because I do not know of a single one. Frequent legislation changes cause instability, and this very negative. Each multi-national and even local company have middle and long-term planning, and after such changes, the planning becomes irrelevant.



Some foreign investors feel threatened by the so-called "non-productive investments" they have to make in order to harmonise their operations with the requirements of the EU. What about Zagorka?

Well, we want to be part of the European Union therefore we have to stick to its regulations and requirements. Zagorka is ready to enter the EU, and Zagorka is not worried that the EU will enter Bulgaria...