Unless Romanian companies can keep production costs lower than those in EU countries, Romania may be faced with the same situation in 2007 that Hungary experienced on joining the European Union when the market was flooded with cheap German beer. "The market could be invaded by cheap beer, such as happened in Hungary, if production costs continue to rise and reach a level higher than in European Union countries. Prices in Romania are heavily influenced by salary costs and excise duties are half the levels seen in Hungary when it joined the EU," said Shacar Shaine, chairman of United Romanian Breweries Bereprod (URBB), which bottles Tuborg, Carlsberg and Skol for the Romanian market. URBB is controlled by a group of Israeli investors. Carlsberg also owns a small stake in the company. Production costs per litre of beer in Romania rose by 15% last year, says Shaine, though he does not expect them to continue rising at this rate this year. ZF
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