Beluga Public Joint Stock : GROUP announces operating results for 2021

Key figures for the period:

· The company's overall sales amounted to 17.5 mln 9L cases, exceeding last year's record by 0.6%

· The sales of the company's own products decreased slightly -2.6% to 14.6 mln 9L cases, with that the sales of imported partner brands went up by 20.7% to 2.9 mln 9L cases

· The export sales grew by 77.3% and reached 632 thousand 9L cases

· The sales of Beluga vodka increased by 51.4% overall, with the export sales exceeding domestic volumes for the first time ever, rising on +104.5%

· The WineLab retail chain opened its 1,000th store by the end of December, growing 56% versus December 2020, with sales up by 31.9%

The company continues its development according to the strategy and shows positive dynamics. At the end of the period, sales exceeded last year's high driven by the demand at the start of the pandemic. Thus, the group replicated the success seen in 2020. Own and partner brands from the high-margin premium segment are growing. The drivers among own brands were vodkas Beluga, with more than 50% growth, Snow Owl (+8%) and Arkhangelskaya (+14%), which passed the 3 million 9L cases mark, cognacs Bastion, with sales doubling, and Tiflis Treasure, demonstrating double-digit growth, and from other categories Fox & Dogs whiskey (+26%), Green Baboon gin, growing twice, and wines - still Golubitskoe Estate and sparkling Tête de Cheval (+27% combined). Among the partner brands, high sales figures were demonstrated by Tullamore D.E.W and Glenfiddich whiskeys, Torres brandy, as well as a wine portfolio.

Exports are recovering, with Beluga vodka sales outside Russia rising by 104.5%, reaching the highest values in the brand's history and exceeding the volume sold in Russia. The brand is gaining popularity worldwide and is showing impressive momentum in the US, Israel, Germany, Poland and also has a strong positions in France, England and Australia.

WineLab retail chain is growing both in quantitative and qualitative terms. At the end of December, the number of chain stores exceeded 1,000. Thus, its volume increased by more than 50% over the year. Generally, new outlets were opened in Moscow, the Moscow region and Saint Petersburg. Sales volume increased by 31.9%, like-for-like sales by 14.8%%, traffic by 21.9%, and the average ticket by 8.3%. The development of e-commerce continued based on click & collect system, with sales in this format up 2.3 times compared to 2020. More than 440 thousand online orders were picked up by customers during this period.

Alexander Mechetin, Chief Executive Officer of BELUGA GROUP, commented on the results: "In 2021, the company keeps its qualitative development. Current operating results demonstrate the effectiveness of the chosen strategy of premiumization and business diversification.

Our company focuses on several areas: in addition to production and distribution of our own products in Russia, we also exclusively represent world-renowned partner brands in the country, ship our own brands abroad and develop our retail chain. All of these businesses are commercially successful and complementary, ensuring sustainable growth.

A strong position in the Russian vodka market remains one of the priorities for the group. Arkhangelskaya vodka shows double-digit growth; its sales in 2021 exceeded 3 million 9L cases. Our brands were again included in key world ratings: Beluga vodka was ranked by The Independent as the best vodka by the sum of all indicators, while Belenkaya, Arkhangelskaya, and Tsar were included in the prestigious rating of the publication Drinks International, The Millionaires' Club. Arkhangelskaya was #1 in the list of the world's fastest-growing brands of strong alcoholic beverages across all categories, and Belenkaya was deemed #1 among Russian brands in the overall rating. To strengthen the company's positions in the mass middle-price price segment, an agreement was signed in December on the purchase of vodka brands "Staraya Moskva" and " Zimnyaya Doroga". Both brands are well-known in Moscow and the Central region and have growth potential.

It is worth mentioning that our focus on high-margin products proves its value: most positions in premium price segments demonstrated double-digit growth. In particular, the super-premium vodka Beluga shows an unprecedented result. The brand has grown by more than 50%, and doubled the growth outside the country. Undoubtedly, this was facilitated by bright and large-scale activations: acting as the exclusive vodka partner of the Russian pavilion at Expo 2020 in Dubai, and as one of the official partners of the historic event for restaurateurs and foodies in the capital - the first edition of the MICHELIN Guide in Moscow, also the opening of the luxurious Beluga Caviar Bar in Sheremetyevo. The special attention should be paid to elegant branding, integration and installations in the UK, Mexico, Israel, Germany, France and Australia.

Category diversification outside the vodka segment is important to the company's success, so we are working to create drinks in the categories of Brown Spirits (cognac and whiskey), gin and wine, extending the product lines with new flavors. Of recent achievements, I would like to mention the inclusion of five wines from the Golubitskoe Estate in Forbes magazine's first independent ranking of the best Russian wines.

We are developing partnerships with the world's leading producers for the exclusive distribution of their brands in Russia. In 2021, we celebrated the 10th anniversary of our cooperation with William Grant & Sons and prolonged our contract for five years. Another exclusive contract - with RIEDEL - was prolonged for three years. What is more, we have signed several perspective agreements - with Rémy Cointreau and De Kuyper Royal Distillers. They will come into force in 2022. And in 2021, the import portfolio was extended through XUXU liqueurs, Southern Comfort whiskey liqueur, as well as four new wines from Vranken & Pommery Monopole Group including the Pommery flagship champagne with a 185-year history.

A significant segment of our business is the specialized retail chain WineLab. It experienced impressive success: the number of outlets has exceeded the 1,000 stores, and the number of loyalty program participants is now over 4 million people. The chain expansion leads to increase in sales of our own and partner products. In addition to brisk growth, we pay special attention to customer satisfaction. That is why we are also developing e-commerce. Thus, to improve customer satisfaction, in 2021, we started cooperating with the SberMegaMarket and Wildberries marketplaces enabling the customer to make an order using the click & collect system. Besides, in addition to the ability to order products from the chain's shops, an in-store ordering option has been connected, allowing customers to choose from a wider range of beverages. The achieved dynamics in the development of our chain, allows us to be confident in the implementation of the strategy to double business by 2024, since WineLab is considered to be one of its main drivers.

Our company was included in four ratings published in 2021 by the country's respected agencies: improved its positions on 13 points in Forbes' '200 largest private companies in Russia' ranking to No. 167, becoming No. 11 among agribusiness companies, and the only alcohol company represented in the list; No. 226 in the RBK 500, improving its position from 249 a year earlier; No. 247 in the RAEX 600, becoming No. 1 among producers of strong alcoholic beverages and entering top-10 companies from the food industry; and No. 259 in the Expert 400, being No. 1 among producers of strong alcoholic beverages.

What is more, the company's results led to the inclusion of BELUGA GROUP shares in the SMID Index of Moscow Exchange, as well as the international MVIS Russia Small-Cap index, which consists of 25 securities selected based on the criteria of liquidity, capitalization and the proportion of shares in free float. In addition, the rating of BELUGA GROUP was upgraded by international rating agency Fitch to BB- and the largest Russian agency Expert RA to ruA and the forecast was improved to positive and stable respectively. SPO became an important event of the year. As a result of this deal, 2 million shares amounting to 12.7% of the group's share capital were acquired by international and Russian investors, including both the world's largest funds and individuals. The number of BELUGA GROUP shares in free circulation has almost doubled. The company will use the profit from this deal - 5.6 billion RUB - to accelerate the development and implementation of transformational projects. Among the priority direction we see the opening of new WineLab outlets, the development of e-commerce and the marketing of the Beluga vodka on export.

In 2021, we issued our first GRI-compliant ESG report and began to align our work with ESG principles, striving for environmental balance, being aware of social responsibility and ensuring solid corporate governance. In 2022, we keep up this work, and the company will contribute to the achievement of the UN Sustainable Development Goals.

It has been a productive year, and I would like to thank the BELUGA GROUP team for our new successes and, at the same time, motivate them to continue working hard to strengthen company's leadership position. Constant development and entrepreneurial spirit are embedded in the DNA of the group. These features and this energy distinguish us from thousands of other companies. We continue to work to ensure that the 2022 figures are even higher, that connoisseur of our brands remain loyal, and that partners appreciate the collaboration and its results".