At a time when the leading soft drinksmultinationals are coming under growing competitive pressures from proliferating localproducts, the Chairman of Coca-Cola Beverages, Neville Isdell, is to deliver the keynoteaddress at a major two-day international soft drinks conference in Prague, Czech Republic,18-19 November,1999. He will speak on “The long term strategic imperative and theneed for short term flexibility”.
Following its merger with Hellenic Bottlingof Greece, Coca-Cola Beverages is now the second largest ‘anchor bottler’ withinthe global Coca-Cola bottling system.
The conference is being organised byCanadean Limited, the leading international beverage industry research analysts, under theoverall theme of ‘Structural change and competitive response’. Several seniorexecutives from leading central European soft drinks businesses will speak at this event,alongside companies such as Pepsi-Cola General Bottlers, Procter & Gamble,Eckes-Granini as well as Tesco and Ahold/Euronova.
Current developments in the Czech softdrinks market amply illustrate the way local players have more than measured up to thecompetitive challenge from the leading multinationals. Today the cola segment, forexample, traditional stronghold for Coke and Pepsi, has ceded leadership to orange andlemon products which have boomed in recent years thanks mainly to the strategy of localproducers utilising plentiful ‘natural’ mineral water as the basis for theirsoft drinks.
Only four years ago the combined corporateshare of Coca-Cola and Pepsi-Cola was some 24% of the carbonates market, compared with acombined total of around 13% for the three local leaders, Hanacka Kyselka, Podebradka andToma. By last year, while Coke and Pepsi had edged up their share to about 28%, the threekey locals’ share had jumped to over 30%, according to latest Canadean report on theCzech soft drinks market.
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“Looked at another way, whileCoke/Pepsi accounted for some 38% of the incremental growth of the Czech soft drinksmarket over the period 1994-98, those three local competitors accounted for 68% of thatadditional growth”, says Robert Kay-Shuttleworth, Director of Beverage Services atCanadean.
Another important reason for the success oflocal producers has been the availability of low cost PET bottles which have proved such asuccess with consumers. One-way PET bottles now account for more than half the carbonatesmarket, against less than a quarter four years ago, the Canadean report calculates.
A number of other factors have combined toreduce the cost of entry to the soft drinks market, enabling local manufacturers tocompete effectively with the established multinationals. Western European flavour houses,for instance, have targeted central European bottlers in an effort to broaden their clientbase, and in so doing have been a source of high quality fruit compounds and flavours, atvery competitive prices. Long experience of blending flavour ingredients with a widevariety of mineral waters (in Germany, for example) has helped Czech customers takeadvantage of their own abundant local waters.
Again, the arrival of Western supermarketchains has created new quality standards which locals have had to meet if they are to belisted in the new stores. All the evidence indicates that they have been able to meetthese new standards, and at prices which are significantly lower than multinationalbrands. Toma’s new ‘fresh lemon’, for example, is priced 45% per litrebelow Coca-Cola.
Note: For full details ofthe International Soft Drinks Conference in Prague, 18-19 November, 1999, see the Canadeanwebsite,
Canadean’s latest report on the Czechsoft drinks market forms part of the Soft Drinks Service which includes 34 countries ofGreater Europe. For further details contact Robert Kay-Shuttleworth, Director of BeverageServices on tel : + 44 (0)1256 394224, Fax : + 44 (0)1256 394201 or email