Full of Promise

The European Market for Bottled Water

East Europeans drank almost 10 percent more soft drinks in 2001,
pushing consumption past the 20,000 million liter mark for the first time,
according to the 2002 East Europe Soft Drinks report from Zenith International.
Volumes have jumped 36 percent since 1997, despite the economic troubles of the
late 1990s. "1999 was a particularly difficult year after the collapse of
the Russian rouble in August 1998," commented Gary Roethenbaugh, Zenith
research director. "Since then, East Europe's soft drinks industry has
been reinvigorated by a flurry of restructuring activity including the
privatization of state-owned enterprises, increased foreign investment and new
joint ventures."

The two fastest growing countries between 1997 and 2001 were
Serbia and Bulgaria, both achieving gains in excess of 70 percent. The two
biggest national markets of Poland and Russia had contrasting fortunes in 2001.
Russia speeded up to top the rankings with growth of 20 percent, while Poland
slowed to hit the bottom with growth of 4 percent. Individual consumption was
highest in the Czech Republic at 239 liters per person in 2001, more than eight
times the level in the Ukraine at 29 liters. The East European average of 64
liters has a long way to go before catching the West European figure of 223
liters.

Carbonated soft drinks were the largest overall product
market with a 40 percent volume share, but growth has been modest. Bottled
water, however, has consistently managed double-digit growth to reach 30
percent.

The new Zenith report provides a host of other details
including

*               Flavors—Colas
lead carbonates with a 31 percent share, while orange is most popular for fruit
juice/nectars and dilutables.

*               Packaging—PET
bottles have a commanding 61 percent share, followed by glass on 21 percent and
cartons on 13 percent, with cans held back to just 2 percent.

*               Companies—The
top 50 national operators are responsible for 47 percent of total volume
including 12 entries by Coca-Cola and 7 by PepsiCo.

"East Europe represents a clear strategic priority for
the international soft drinks leaders," added Roethenbaugh. "But the
importance of local operators should not be underestimated. They still account
for the majority of sales."

The Zenith report also offers other insights into East
European soft drinks trends.

*               Bottled
water—Six national markets have doubled since 1997.

*               Energy
drinks have been slow to build.

*               Kvass
malt-based beverages staged a recent revival.

*               Raspberry
is the third most popular dilutables flavor with a share of 8 percent.

Concluding with detailed forecasts, Zenith predicts East European
soft drinks growth of between 7 percent and 10 percent per year to pass 29,000
million liters by 2006.    

Zenith International is a European drink consultant and may be reached at +44 (0) 1225 327900; www.zenithinternational.com.

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