Branded players face stiff competition from private label - Sanford Bernstein

Branded players face stiff competition from private label - Sanford Bernstein

Following just-drinks' report on Coca-Cola Enterprises' potential acquisition of The Coca-Cola Co's bottling operations in Germany, we take a closer look at Germany's soft drinks market.

Unless otherwise stated, market figures are taken from Euromonitor's report on the German soft drinks market, released in January 2011.

  • According to analyst group Sanford Bernstein, Coca-Cola Enterprises (CCE) would boost its annual volume sales by 50%, if it acquired Coca-Cola's bottling operations in Germany. However, it warned that the move could be "dilutive to annual top-line growth" for CCE.
  • Between 2005 and 2010, Germany's soft drinks market increased by 10% in value, to EUR12.2bn (US$16.6bn). Carbonated soft drinks were the top performers, growing value by 23%, with bottled water up by 19%. The figures include ready-to-drink coffee.
  • Volume sales for the total soft drinks market increase by 11.6% over the same period, to 20.1bn litres. Again, bottled water and carbonates were the outstanding performers, largely at the expense of fruit juice, which saw volumes drop by a quarter.
  • The Coca-Cola Co was the biggest player in the off-trade by value, followed by PepsiCo and then Nestle. Eckes AG came in at number four.
  • Despite being the largest player, Coca-Cola has not had it easy in Germany. Bernstein said that the company has restructured its business in the country several times since 2003. 
  • Private label is a big challenge for branded players. Bernstein said that Coca-Cola the brand has only a 10% volume share of Germany's soft drinks market, compared to a 37% volume share for private label drinks. Germany's consumers, it said, also have the highest household saving rate in the Euro area, indicating that they are "exceptionally value conscious", Bernstein added.