Ceepackaging

Analysis

Cola expanding east

The study outlines that, while the companies will push their operations into Western countries where they are less present, investment in their established CEE brands will continue to drive the bulk of their growth.

The report found that bottled water is now the second biggest market globally for soft drinks behind carbonated beverages. Between 2000 and 2005 it was actually the leading sector for growth in the drinks market.

Of this growth both Pepsi-Co and Coca-Cola have led the way, with off-trade volume growth at 226.8 per cent and 277.9 per cent respectively – due mainly to rapid expansion in markets in Eastern Europe and Asia.

While they remain the two most dominant bottled water producers in Eastern Europe region however, Coca-Cola and Pepsi-Co rank 7th and 31st respectively in Western European markets.

With total volume growth for bottled water in the western bloc set to double the amounts in Eastern Europe over the coming five years, the companies appear keen to increase these shares in in Western Europe’s burgeoning markets.

The report adds that this may be difficult however, as the market is highly consolidated with rivals Nestle and Danone accounting for 25 per cent of activity in the bottled water sector alone.

Despite the growing importance of Western European markets to bottled water companies, it is Eastern Europe, which currently offers Coca-Cola the greatest potential for expansion according to Euromonitor.

“The company is more likely to make acquisitions in a country where it can expand its existing business rather than entering a completely new market,” said the report.

Turkey and Russia in particular offer huge potential for expansion, while significant markets that surround them like Romania have also seen a surge in activity.

In July this year PepsiAmericas, a division of Pepsi-Co purchased a further 51 per cent stake in Romanian bottler and distributor Quadrant-Amroq Bottling Co.

Ukraine was also found to offer much potential with Coco-Cola already holding an 8 per cent share, behind regional market leader Georgian Glass & Mineral Water Holding, who are responsible off 20 per cent of off-trade volume.

While Pepsi-Co is not yet present in the country, the possibility of acquiring Russian beverage company Wimm-Bill-Dann could put them in a healthy position to enter the market.