BALTIKA, the Russian joint venture brewery business majority-owned by Scottish & Newcastle and Denmark's Carlsberg, yesterday said it had become a majority shareholder in three small Russian beer makers, taking it a step closer to a planned full merger.

The St Petersburg-based company said the legal merger of Vena, Pikra and Yarpivo breweries had been achieved via a shares exchange.

The deal still requires the formal go-ahead from shareholders meetings in the three breweries, although the companies are already working on merging their operations.

Anton Artemyev, Baltika's president, said: "The group is now working with full speed to integrate all operations, sales, distribution and administration."

The company said it would acquire 92.76-per cent in St Petersburg-based Vena, 91.9-per cent in Krasnoyarsk's Pikra and 87.19-per cent in Yarpivo in Yaroslavl.

The four breweries together have a combined annual production capacity of 37 million hectolitres of beer, compared with Baltika's 24 million hectolitres.

The deal raises from 35-per cent to 40-per cent Baltika's share of the booming Russian beer market, where consumers have rapidly switched from traditional vodka.

Established in 1990, Baltika has five breweries in St Petersburg, Rostov-onDon, Tula, Samara and Khabarovsk, with total capacity of 24 million hectolitres a year.

Baltika also produces Foster's and Carlsberg under license in Russia, and sells its products in Russia and 38 other countries.