As the global economy surfaces after months of turmoil, it is becoming clear that emerging markets are where soft drinks companies will fight for growth in 2010.
This week, the leaders of some of the world’s largest food and beverage manufacturers headed to Florida for the annual Consumer Analyst Group of New York (CAGNY) conference to discuss the economic downturn and how to deal with still-weak consumer confidence in many markets.
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For industry watchers, the event provided a window into the future strategy of many major firms including PepsiCo, Danone and Coca-Cola Amatil, who in turn, laid out their strategies for the year ahead.
Yet a recurring theme throughout the week has been a like-minded focus and optimism for emerging and developing markets.
PepsiCo, which yesterday (18 February) said it hopes to complete the deal to buy its bottlers by the end of February, has targeted Russia in particular as a “window of opportunity” for growth.
CEO of the firm’s Europe division, Zein Abdalla, said the soft drinks firm plans to “step up several gears” in the country, claiming “the best is truly yet to come”.
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By GlobalDataAbdalla is clearly not deterred by Russia’s weak economy, which was hit harder than most in 2009 by the flight of foreign investment and fall in oil price as a result of the global economic downturn.
Likewise, bottled water giant Danone has talked of a “rebound” in Russia’s economic difficulties in 2010, which go some way to offset sluggish bottled water sales in western countries.
Danone’s volume sales growth in 2009 continued to be entirely driven by the emerging markets – accounting for 52% of the division’s sales.
No surprise then that group CFO Pierre-Andre Terisse yesterday reiterated the firm’s intention to focus on emerging and developing markets in the coming year, targeting a 50% increase in consumer penetration in the regions.
While Western European countries remain in a state of economic difficulty, Terisse believes emerging countries are driving growth and offer “lots of opportunities” to capitalise on that growth.
Nestle Waters has also conceded that mature western markets remain weak for water sales, with emerging markets reporting double-digit bottled water sales growth in 2009.
Coca-Cola FEMSA, meanwhile, following the sale of its beer arm Cerveza to Heineken, has hinted it will be looking outside of its home ground and towards Asia for growth opportunities.
