Coca-Cola HBC Poland boss sees ‘huge challenges’ in growing discount dominance


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Coca-Cola Hellenic has three production plants in Poland: Radzymin, Staniątki and Tylicz (Picture Copyright: Coca-Cola Hellenic Polska)
Coca-Cola Hellenic has three production plants in Poland: Radzymin, Staniątki and Tylicz (Picture Copyright: Coca-Cola Hellenic Polska)

Related tags Coca-cola Poland

The rise of discount retailers – along German lines – will create huge challenges and opportunities in Poland’s RTD beverage market through to 2020, says the general manager of Coca-Cola Hellenic Polska.

Speaking at the recent 2013 InnoBev Global Beverages Congress in Warsaw, organized by Zenith International, Ahmed Elafifi, general manager and president, Coca-Cola HBC, said that Poland represented a very large RTD opportunity.

In terms of growth potential, Poland has quite a high starting point in terms of consumption with 821 NARTD servings per capita in 2012 (Canadean), Elafifi said. “However, there’s a long way to go to watch Western European levels, and obviously the highest EU level in Germany – 1,453.”

Coca-Cola contributes 1bn+ unit cases of beverages per year to Polish NARTDs, and was 2012 market leader with a 12.5% volume share (22% value): with a 32% volume share in sparkling beverages, 31% share in RTD tea, and niche positions in Energy (6.5%), water (3%) and juices and juice drinks (2%)

Sports, energy, water, teas are hot…

Noting exponential Polish growth in RTD teas, sports drinks and energy from 2007 to 2012, Elafifi explained that in 2012, 48% of the Polish NARTD market was water, while juice (17%) and sparkling soft drinks (28%) were the two other main segments.

With 14.6% CAGR from 2007-2012, teas, sports (+20%) and energy (+21.1%: CCH began distributing Monster Energy and Burn in Poland last year) grew fastest, he said, albeit from a smaller base (4% share for teas, 2% for sports and energy) while juice sales fell 1.6% across the reporting period.

Elafifi cited Canadean data forecasting growth 2.2% CAGR for NARTDs as a whole from 2013-2020, with sports (5.5% growth) and energy (5.9%) predicted to outstrip other categories.

Going forward, the continued of discount retailers in Poland was the “most important dynamic in Poland” ​and made the nation’s market very peculiar, Elafifi said, referring to Nielsen data.

“Yes, there continues to be some growth, around 2% in the next years,However, there is a very big shift within this market,”​ he said. “Traditional trade is declining – 52% in 2007 to 40% in 2012 – and there is a huge growth in discounters – reaching over one third (32%) of the market by 2020.

‘A time to work closer with our customers…’

“This is something moves Poland more in the direction of Germany, and this is a huge challenge, from one side, but also, a very big opportunity,”​ he added.

Challenging, because beverages sold via traditional channels had offered suppliers strong profit margins, Elafifi said, whereas servicing discounters with very big contracts created margin pressure.

“But this is a big opportunity, because discounters are where the big growth is happening in Poland, with consumers coping with economic challenges by moving to value-driven products,”​ he said.

Price sensitive Polish consumers were particularly astute in regard to value: what they bought, and where they bought it, while there was “relatively low brand loyalty and relatively high usage among different brands,”​ Elafifi explained.

BeverageDaily.com asked Elafifi about the market dynamics behind a predicted growth slowdown in Polish NARTDs from 2013-20, with no one category expected to exceed mid-single-digit growth.

“This is the time to work much closer with our consumers, think of their needs more, and take some tough decisions. Not necessarily in terms of producing short-term results, but in terms of joint value creation – understanding consumer insights, needs, the value they are seeking,” ​ he replied.

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