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Eastern Europe is set to provide impressive growth for bottled water companies, according to a recent report.

Sales of bottled water last year in the region rose by 9%, a report by drinks analyst Zenith International has highlighted.

For the first time, annual consumption in the region broke the 10bn-litre barrier. An average summer across Europe, following the poor weather of 2004, reinvigorated demand in what is one of the world's fastest growing bottled water markets, the report, published yesterday (12 September), noted.

"East European growth promises to remain strong for a number of years to come," said Zenith research director Gary Roethenbaugh. "We expect volumes to exceed 11bn litres in 2006, particularly after an excellent summer. Annual rises are forecast at around 7% over the next five years. With sustained marketing investment and favourable weather conditions, these estimates could prove conservative."

He added: "In contrast, sales in West Europe will look relatively flat, despite a boost from a hot early summer this year."

With average bottled water consumption per person at 33 litres in East Europe, compared with 108 litres in West Europe, the region offers impressive growth potential, said Zenith.

"Rising standards of living, together with a growing appreciation of health and hydration, should provide great opportunities for water bottlers," Roethenbaugh continued. "Aggressive pricing to gain market share, advances by own label and discount brands, alongside substantial advertising budgets from multinationals and local players alike, will also drive volume sales."

Poland was the largest consumer of bottled water last year, accounting for 23% of total volume. Russia was second at an advancing 21% and Romania was third with a 10% share. In terms of growth rates, Bulgaria led the way with a 22% increase, followed by Hungary, Estonia and Russia. Eleven of the 15 countries analysed experienced growth rates in excess of 5%.

The global big four bottled water companies - Nestlé Waters, Danone, Coca-Cola and PepsiCo - have actively strengthened their positions in East Europe.

"Zenith anticipates further acquisitions in the region by the top four bottlers, given this climate of relatively high growth and a plethora of local bottlers," Roethenbaugh said.

"However, national operators have strong positions and a loyal customer base. They include: European Drinks in Romania, Jamnica in Croatia and Myrhorod in the Ukraine."


Sectors: Water

Companies: Nestlé Waters, Groupe Danone, PepsiCo

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