Czech soft drinks consumption matches western Europe

Related tags Soft drinks Soft drink Euromonitor

A recent market reports shows that in the Czech Republic - one of
the most developed markets in Central and Eastern Europe - the
consumption of soft drinks is rapidly catching up with the western
Europe average.

According to the Euromonitor report, the market for soft drinks is currently one of the most dynamic in the Czech beverage industry. Off-trade sales of soft drinks in the Czech Republic are approaching European levels, having increased by 40 per cent in volume terms over the past three years.

Sales of soft drinks have been boosted by the increased availability of drinks sold in PET bottles, which have made the price of drinks in larger sizes more attractive, as well as making storage and handling for retailers much easier, Euromonitor says. PET accounted for 79 per cent of all soft beverage sales in the country during the course of 2003. Sales were also supported by the expansion of multiple stores, as well as the introduction of new flavours and functional products. The growth in household incomes has also helped consumer expenditure on soft drinks to keep increasing.

Carbonates, mineral water and table water have proved to be the most popular soft drinks in the country. In 2003, Czech consumers will consume only 17 per cent of their soft drinks volume in on-trade outlets and a huge 83 per cent at home, the report says. Off-trade volume sales are expected to increase by nearly 5 per cent in 2003 on the previous year, following consistently high growth rates in consumption during the review period.

Flavours and functionality boost sales

Just two sectors account for 81 per cent of overall off-trade volume sales: carbonates (50 per cent) and bottle water (37.6 per cent). Followed by fruit/vegetable juice with 10.6 per cent. All the soft drinks sectors benefited from growing consumer interest in healthy living and high levels of market development by the manufacturers and has contributed to the growth of the functional drinks sector in particular, Euromonitor says. New flavours and functional ingredients continued to capture consumer interest.

The increase in the consumption of mineral and table water at the expense of carbonates is another result of increased consumer interest in living healthier lifestyles. Shoppers today have a complete range of products to choose from, including flavoured water and a selection from an array of packaging shapes and sizes. The report also highlights that key purchase criteria for mineral water includes taste, brand name, mineral content, price and packaging. The major market trend has been the explosion of interest in flavoured water, including orange, peach, grapefruit, apple and, most recently, blackcurrant and lemon which remains the most popular flavour. Indeed Dobra Voda's light lemon and grapefruit product was voted one of the Products of the Year in 2002 by consumers.

Consumer interest in healthy drinks has been one of the main drivers, leading to greater demand for products with enhanced nutritional and health benefits, such as multivitamin juice drinks, reduced sugar content, products enriched in fibre and vitamins and chemically pure goods.

Domestic players dominate fruit drinks

Currently the fruit/vegetable juice sector is dominated by domestic companies. Over the years the leading domestic beverage companies extended and updated their product lines with additional flavours and invested in product development, packaging, distribution and marketing, which gave the sector a modern new look and supported sales, the report says. Initially, 100 per cent juice and nectars were the most dynamic product areas in fruit/vegetable juice, but growth has now slowed in these areas due to increasing competition from cheaper carbonates and juice drinks. This means that the cheaper juice drinks with up to 24 per cent fruit content and enriched in multivitamins have now become the most dynamic category.

The report also highlights how sports and energy drinks saw rapid growth in both volume and value terms, albeit starting from a low base, thanks to the increasing influence of media coverage and often controversial promotions. The on-trade was taking an increasingly large share, reaching a forecast 63 per cent of volume sales in 2003. This was driven by the growing trend among young people to mix these functional drinks with alcohol.

RTD tea was still a relatively new sector showing steady growth fuelled by imported brands and the recently launched Sunday by Podebradka and Nestea Cool by Coca-Cola. RTD coffee is the newest and smallest sector, with expected further growth determined by the launch of new brands.

In the concentrates sector, liquid concentrates are out of fashion and experiencing declining sales, Euromonitor says, while powder products were revived by the brand Tang, which accounted for 80 per cent of all powder concentrates volume sales in 2002.

Domestic producers lead

Karlovarske Mineralni Vody was the leader of the soft drinks market in 2002, followed by General Bottlers and HBSW. The leading seven companies - the three above-mentioned players as well as Walmark, Coca-Cola, Hanacka Kyselka, and Santa Napoje Krnov- controlled 53 per cent of the soft drinks market in 2002.

Domestic producers have proved to be strong competitors and lead in a number of sectors, most notably in fruit juice and bottled water. With the growing popularity of mineral water based carbonates, the domestic producers also strengthened their position in the carbonates sector.

Domestic companies have modernised their production lines and invested heavily in product assortment, packaging, and promotion over the past few years. The basis for their expansion has been the ability to increase production to meet the growing demand and the ability to guarantee smooth deliveries to the increasingly demanding retail chains. Domestic producers have also had the benefit of a lower price point and the long-established tradition of many of their more popular brands.

The results of the Euromonitor report prove that, as the Czech Republic is poised to join the EU 25, the level of investment carried out in recent years means that its soft drinks industry is in a strong position to benefit from an expanded market. Czech beers are already renowned throughout Europe, could it be the country's carbonated drinks next?

Related topics Markets Soft Drinks & Water

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