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SOFT DRINKS: DYNAMIC UKRAINE ATTRACTING PLENTY OF ADMIRERS 10.07.2007

The Ukrainian Soft Drinks market is booming. Having grown by almost 130% in the last five years, it is also attracting the attention of the major international players, a fact confirmed by the recent acquisitions of Sandora LLC and Rosinka by PepsiAmericas Inc./PepsiCo and Orangina Schweppes.

The latest research from Canadean, the global beverage research specialists, reports that much of this success can be attributed to the favourable climate and healthy economy. The latter has certainly provided consumers with higher disposable incomes and their behaviour is increasingly being shaped by the West. The move towards healthy living is just one of the trends to have been recently replicated in Ukraine.

Spectacular growth for Iced/RTD Tea and Energy drinks…

Iced/RTD tea and Energy drinks have been very much the pace setters within the market. These rapidly expanding categories both performed exceptionally well in 2006 and further strong gains are likely to be recorded this year.

Iced/RTD Tea was first introduced by CCHBC through Nestea. The brand has benefited from the considerable marketing and distribution strengths of its owner and has been further enhanced by the launch of 100cl carton and 33cl can formats. A number of other producers have also launched new products, helping to stimulate demand.

In Energy drinks, the market leader Coca-Cola is being aggressively followed by Red Bull whose increased shelf space is being supported by significant advertising activity. The major brands are well represented in the retail outlets and, fuelled by increased marketing support and more affordable brands, the category should again progress rapidly during 2007.

Packaged Water is about to replace Carbonates as the most popular category and it is interesting to note that research has found taste, quality and health benefits to be the three most important factors for consumers when purchasing a Packaged Water brand. In response to such findings, leading players such as CCHBC, IDS Group and Izumrud have tailored their advertising campaigns in order to appeal to the health conscious consumer. Price is ranked as only the fourth most important criteria.

Record acquisition in Juice…

Juice has been one of the fastest moving categories of late and was the scene of the huge takeover of Sandora by PepsiAmericas Inc./PepsiCo. This deal was the largest in the history of Ukraine’s food and beverage industry and provides Pepsi with the perfect position from which to exploit the market’s potential.

Competition between the leading producers based in Ukraine and Russia should intensify in the future, testing the already strained relationship between the two nations. Mixed flavours are gaining ground with further taste innovations expected in the short term.

Despite losing market share, Carbonates are growing but at a far gentler pace than these more dynamic categories. As margins are squeezed ever tighter by the increasing competition, many producers are concentrating on the development of novelty brands or more profitable ‘value adding’ options.

Overall, Soft Drinks are predicted to advance by around 14% this year. The dominant position held by many local producers however could well be challenged once Ukraine finally signs up to the WTO.

Canadean’s “2007 Ukraine Soft Drinks Report” provides 329 pages of detailed data and analysis on this market including a summary of the latest emerging trends and new product developments. For further details, please Sara Eddleston on Tel: +44 (0) 1256 394224, email: soft@canadean.com.

Canadean Ltd
12 Faraday Court
Rankine Road
Basingstoke
RG24 8PF
England
Tel: +44 (0) 1256 394210
Fax: +44 (0) 1256 394201
Email: sales@canadean.com
Website: www.canadean.com


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For investors: new entry
Novokahovskyi Lime-Sand Brick Plant

Purposes of company: Investments
Company description:

Market Overview:  Construction volume is increasing 20-25% annually, creating an increased demand for high quality façade bricks. The industrial capacity of façade bricks is estimated at 200 million bricks per year. In 2006, a construction boom is expected in southern Ukraine, where the plant is located. The product is used mainly by construction companies and private companies.

Project Overview:

  • Using KSE-400 (Germany)
  • Equipment supplier offers trainings for the buyer’s staff
  • Can produce 30 million bricks per year including high quality hollow façade bricks, ordinary bricks, molded bricks, white and colored bricks

Competitive Advantages:

  • Production of lime-sand bricks is considerably more energy efficient than the production of ceramic bricks. Moreover, the project envisions the reconstruction of one of the two pit-type 50-ton lime-burning kilns; using coal, automatic blending, loading, and burning will save on gas
  • Plant produces its own lime; a sand-pit is located close to the plant
  • No high quality lime-sand hollow bricks are produced in southern Ukraine
  • Due to the considerable decrease in the weight of the bricks, delivery and transportation becomes much easier; bricks can be transported by auto, railway (via the plant’s rail track), or by water (a river port is 8 km away)
    Investment Project Progress:  Market research has been conducted

Key Financials:

  • Total Investment - € 1.5 mln
  • Investment Needed - € 1.5 mln
  • Payoff period - 5 years

Branch: Construction materials
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Purposes of company: Investments
Company description:   
Branch: Construction materials
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Purposes of company: Export
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Purposes of company: Distribution
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