Having successfully completed its 52nd year in business, Anadolu Efes has continued to strengthen its position as one of the leading players operating in a vast geography with a diverse product range of well-known beer and soft drink brands. Anadolu Efes is Europe’s 5th largest and the world’s 9th largest brewer by production volume, and the company carries its operations into the future as a global company together with its export markets that reach out to hundreds of millions of consumers from different cultural backgrounds and profiles all around the world. This year, our beer operations once again preserved their strong positions in Turkey, in our key and world’s 6th largest beer market in Russia, and in Kazakhstan, Moldova, and Georgia, which continuously develop in parallel with their strong growth potentials. Moreover, Coca-Cola İçecek, in which we control a majority stake and which is one of the key bottlers in the Coca-Cola system, remains the first or second-biggest player in every market where it conducts soft drink operations with its production and bottling facilities. As a company operating in a number of countries and exporting to over 70 countries, Anadolu Efes generates more than two-thirds of its sales revenue from international operations.
As the second full year of the pandemic, 2021 was a period during which our lives began to return to normal. We observed a relative recovery as vaccination rates increased rapidly, but the global economic problems manifested themselves differently in this period due to the demand and supply gap. The global economy started to recover from the first shockwaves of the pandemic, but the lagged demand that had been suppressed by lockdowns and closures resulted in supply problems. Owing to supply-side supply shortages, the global raw material, commodity, and energy prices reached record-breaking levels, and the national economies were beset under inflation pressures.
Despite the pandemic restrictions implemented in the first half of the year and shutdown of on-trade sales points, the Beer Group managed to maintain its increasing volume trend in 2021 thanks to its strong performance achieved in international beer operations, particularly in Russia and CIS countries. In our Turkish beer operations, we had some challenges this year due to the restrictions, but a modest recovery in touristic activities supported the volumes. In our beer operations, monthly volume figures reached a record high, particularly in Russia, and we achieved the fourth year of growth in a row. Offering the best choices to the consumers with our strong portfolio is one of the key underlying factors of this growth. Together with that, positive market dynamics supported the growth. Furthermore, we followed the global trends for providing innovative products to our consumers while having a strong momentum in the non-alcoholic segment. In Ukraine, we had a difficult year owing to fierce price competition. Our operations in Kazakhstan, Georgia, and Moldova contributed to the overall growth in volumes through their portfolios enriched with new products and packaging launches as well as the favorable impact of growth in the beer markets supported with economic recovery and easing of pandemic related restrictions. Double-digit increases were achieved in exports to China, Belarus, as well as the Middle East and North African countries in line with our strategy of expanding our geographical footprint helping our volume performance.
Strong performances of the soft drink operations in Turkey, Pakistan, and Kazakhstan brought us double-digit growth rates. We have completed yet another key milestone; the acquisition of Uzbekistan soft drink operations, and accelerated the integration process. The Uzbekistan operation has promising growth potential, and we are going to see its contribution to our consolidated results in the period ahead.
Our sales revenue increased as the prices per hectoliters increased significantly compared to a year ago. This solid revenue growth was supported with our focus on the premium segment in the beer group, proactive value growth actions, and effective discount management. Increasing raw material and commodity prices, volatility in exchange rates, and high inflation rates started to pressurize our profitability since the third quarter of the year. We are continuing to take actions by adjusting prices and using hedging instruments in order to limit the impact on the margins. Our leverage ratio remains at a healthy level thanks to our strong Free Cash Flow achieved through our strict financial policy and effective balance sheet management strategy. Our strong position in the operating markets, extensive portfolio of premium brands, substantial pricing power, and tight expense management capabilities are the fundamental elements of our operational and financial success.
Anadolu Efes’ robust financial structure and governance approaches, as well as its growth potential as a regional power figure, size of its operations, and sustainability of cash flow created, have positive effects on the decisions made by the credit rating institutions and investors. According to the Credit Rating companies Standard & Poors and Fitch Ratings, Anadolu Efes is an “Investment Grade Issuer”, and JCR Eurasia Rating has assigned the highest rating level: “AAA (Trk)” as long-term national rating. Relying on the trust of these strengths, we issued Eurobonds -once again- with the lowest interest rate in Turkish history after 9 years. The company’s USD 500 million Eurobond was oversubscribed by more than 6 times from institutional investors in Europe and the US which should be seen as a testimony of Anadolu Efes’ strong international position and reputation.
Launching investments and innovations demonstrating our R&D capabilities and innovative mindset is one of our greatest sources of motivation. Last year, we launched the “+1 Dinlendirme” (+1 Resting) process in Turkey, and we will continue our related investments in light of its success and positive feedback received from our stakeholders. As a part of our goal to lead innovation and change, we opened our innovation center (Anadolu Efes Yenilik Atölyesi) in Izmir, and “Efes Glutensiz,” the first gluten-free beer developed in this center and produced in Turkey, is now available on the market. The product is produced with buckwheat malt according to the standards of the Association of European Coeliac Societies, and it has the internationally recognized Crossed Grain logo. While improving our production competencies, all our factories received FSSC 22000 Certificate, which is recognized by the Global Food Safety Initiative and which guarantees access to safe food for all consumers all around the world, and this Certificate is a testimony of our sensitivity about food safety.
Acknowledging sustainability as a core element of our business strategy, we strive to have it internalized, first, by all our employees and, then, by all our stakeholders. As a part of our Positive Impact Plan, we are committed to increasing and improving practices focused on the environment, society and governance. Accordingly, we have set our 2030 Sustainability Goals for embodying our initiatives towards the UN Sustainable Development Goals. We are going to enhance our current efforts related to these goals. We will reach net-zero carbon emission in all our operations by the year 2030 and become a certified zero-waste organization. All our breweries and malteries located in Turkey now have Zero-Waste Certificate, and this is a key step in the process of achieving our Zero-Waste goal. We are going to focus on such initiatives to integrate these practices into all our operations. We are going to continue working on the use of renewable energy in production and energy efficiency and taking effective actions for protecting resources and minimizing our environmental impact. Our fight against the use of packaging and plastic will be supported with recycling and innovations such as bio-degradable and bio-plastic products. We believe that improving the entrepreneurship ecosystem is the key to realizing the transformation required for a better world. Therefore, we will share the dreams of young entrepreneurs and support them on all possible platforms.
We will increase our social impact by participating in social projects with all our stakeholders, and we will continue to invest in our communities for a sustainable future. We will focus on our initiatives to support culture, art, and sports’ power to empower and improve society. Anadolu Efes Sports Club, the first team to win a European cup in the history of Turkish sports, won the Korac Cup and once again made our country proud by winning the Euroleague Cup in 2021. On the other hand, our “Future is in Tourism” (Gelecek Turizmde) program has won 17 international awards so far and created a social impact beyond our country, and we are committed to supporting tourism through this project.
Agriculture has become an even more vital aspect of our lives as climate change is becoming an immediate threat; we have been supporting and cooperating with our farmers for more than 40 years, and we collaborate on each and every step of production for sustainable and good agricultural practices. As the first company producing malting barley in our country, our “Future is in Agriculture” (Gelecek Tarımda) project continuously expands its range of R&D and innovation activities from development of barley and common hop seeds to supply of resources for spreading seed production, from raising awareness of our farmers on sustainable agriculture practices through training to smart agricultural practices. Sustainable agriculture is crucial for our future and for creating value for our stakeholders, and we will enhance our practices on this front.
We are a company that seeks to foster awareness about female labor force participation and social gender equality, and we are fully aware of the direct link between sustainable development and women’s empowerment in business life. As a company with Equal Opportunity Model Certificate program led by KAGİDER (Women Entrepreneurs Association of Turkey), a signatory of the UN Women’s Empowerment Principles, and developed with the technical support from the World Bank and as the first FMGG Industry Company awarded with “Women’s Equality at Work” Certificate by the Sustainability Academy and Intertek, our goal is to increase female labor force rate in our organization from 30 % up to 51 % by the year 2030. Equal opportunity, diversity and inclusion are the fundamental principles of our work environment and human resource processes; we are committed to offering a fair, safe work environment that respects human rights.
Our strong brand portfolio, identity as a responsible producer, and pioneering role strengthen our competitive edges as a global player. I would like to sincerely thank all of our esteemed Board Members, shareholders and investors, dealers, distributors, suppliers, business partners, customers, consumers who share and support our hopes and initiatives for a better future, and each and every one of our employees for being the ultimate architects of Anadolu Efes’ success.
Chairman of the Board of Directors