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Furniture Textiles and Apparel Construction Materials
Home Furnishing Tourism Agribusiness

UKRAINE: A Canadean Market Overview

The recent acquisitions of Sandora LLC and Rosinka by PepsiAmericas Inc./PepsiCo and Orangina Schweppes respectively indicated just how attractive the rapidly expanding Ukrainian soft drinks market has become upon the international stage.

Soft drinks consumption advanced by 14% in Ukraine last year and the country’s favourable climate and healthy economy were among the factors contributing towards this strong growth.

The economy has been buoyed by the renewed investment arising from a significant increase in lending by the banks. The expansion of distribution networks by the major companies, increased investment in modern technologies and product diversification have also all played a part.

Although Ukraine’s population has actually declined over the last decade due to natural death rates and emigration, the successful economy has armed consumers with higher disposable incomes. As a result, per capita consumption of soft drinks has rocketed and by the end of this year, the figure will be more than four times that recorded in 1997.

Carbonates slowing as the healthy living trend accelerates…

As general living standards improve, the West is becoming more influential and Ukraine has not escaped the global trend towards healthy living. The ‘healthier'‘ categories of Packaged Water, Juice and Nectars are all prospering at the continued expense of Carbonates.

Carbonates have traditionally dominated the market but look set to be dethroned in 2007 as the category’s share of throat is expected to be overtaken by that of Packaged Water for the first time since the year 2000. This said, consumption of Carbonates is still increasing albeit as a much slower pace than its more dynamic rivals.

Competition within the Carbonates market is intensifying and consolidation has continued particularly among local producers as the smaller players find it increasingly difficult to survive.

With profitability declining in the category, producers are now concentrating their efforts on developing higher margin ‘value adding’ beverages that offer enhanced vitamins, juice or herbs. The producers are also responding to the growing consumer preference for healthy beverages by offering new low calorie drinks or low calorie extensions of existing successful brands.

Packaged Water…

Carbonated Water enjoys the major share of throat but Still Water is gaining ground rapidly. Last year, the Still segment expanded at almost twice the speed of Carbonated Water. The major Packaged Water producers have attempted to capitalise on the healthy living trend and CCHBC, IDS Group and Izumrud are among the companies to have tailored their advertising campaigns in order to appeal to the growing number of health conscious consumers.

Despite price increases of between eight and ten percent being applied, overall consumption of Packaged Water increased by 17% last year and strong gains are predicted for 2007. It is no surprise then that the category is becoming increasingly competitive and a host of new products were launched in 2006 including Zakarpatska Vysokogirna, Premiya and Zhyva Legenda (Living Legend).

There are estimated to be over two hundred producers already actively competing within the market, though the top 15 players currently account for 80% of volume. Given the bright outlook, it is anticipated that the major international players will enter the market in increasing numbers.


Although growth slowed last year, Juice remains one of Ukraine’s most dynamic categories. What’s more, as disposable incomes rise and the healthy living trend gains further momentum, significant advances should be possible for the foreseeable future. Indeed, this huge and rapidly emerging potential is already proving extremely attractive to the major global players.

In return for US$542 million, the largest acquisition in the history of the country’s food and beverage industry, PepsiAmericas Inc./PepsiCo secured an 80% stake in market-leading producer Sandora. The move furthered PepsiCo’s strategy of reducing its reliance on the relatively flat US soft drinks market and brought with it a portfolio of Juice brands. In the process, PepsiCo has been presented with the perfect platform from which to attack the market with renewed aggression.

Juice has also been a hotbed of new product and marketing activity. In 2006, Coca-Cola (Multon) supported its newly introduced Live! Rich brand with extensive TV and in-store advertising and the company has since signalled its commitment to the category by announcing the possibility that it too may purchase a major Ukrainian producer. Ekoproduct were also active, introducing Zolotiye Frukty (Golden Fruits) in Apple, Pineapple, Orange, Multi-fruit and Cherry flavours.

Imported Juice is gaining ground and is likely to account for almost 5% of the market this year compared with less than 3% at the start of the Millennium.


Nectars have advanced rapidly in recent years although at a slightly gentler pace than Juice. Nectars have traditionally been less dynamic than Juice due to the fact that they are perceived by consumers as being a little ‘less healthy’.

However, there is clearly confusion within the market. The majority of producers offer Juice and Nectars under common brands and price points. Although packaging does tend to carry labelling denoting whether a drink is a Juice or Nectar, this information is typically very discrete. As a result, consumers generally appear unable to easily differentiate between the two categories.

Nectars are dominated by two market leaders namely Vitmark and PepsiAmericas Inc./PepsiCo (following the purchase of Sandora). Between them, these companies share over half the total volume. On a flavour level, Cocktail Mix is the most popular segment but is declining along with Apple and Tropical. Pineapple, Cherry and Apple Mix meanwhile, are among the fastest growing options.

Emerging categories…  

Iced/Ready-to-drink Tea and Energy drinks are two categories to have emerged with astonishing speed. Iced Tea grew spectacularly in 2006 and volumes are predicted to expand by an additional 30% this year.

The category is still relatively new in Ukraine, having been introduced by CCHBC in 2005 with the launch of Nestea. CCHBC has taken full advantage of its early mover status and drives the market through its very strong distribution and marketing.
Numerous domestic producers have attempted to follow suit in the last two years with little or no success. Furthermore, the position of Nestea has been strengthened with the introduction of 100cl carton and 33cl can formats. Interestingly, Kharkiv Liquor Plant which is owned by Olimp Corporation (one of the largest Vodka manufacturers in Ukraine) now produces two new Iced Tea drinks under the new Juventa brand.

Elsewhere, Energy Drinks volumes doubled last year having been supported by the considerable marketing activities of Red Bull and Coca-Cola. The promotions undertaken have been so successful that they have raised the profile and popularity of the whole category. Although previously seen as something of a speciality product that was sold mainly through trade centres, night clubs and bars, Energy Drinks are now enjoying rapid growth through the retail sales channel.


The most popular packaging material is PET which is used for no less than 96% of all Packaged Water and 90% of Carbonates sold. The penetration of the material is also growing for Juice and Nectars. Erlan was the first producer to use PET for the packaging of Juice and Nectars in 2004 and has since been followed by several other producers. Meanwhile, Sandora opened its brand new PET packaging plant last year as did Ice-Market for its Juice, Nectars and Still Drinks offerings.

Glass is rarely used in Ukraine although IDS Group has extended its use for the premium Morshynska, Myrhorodska and Borjomi Packaged Water brands. 

Looking forward…  

The economy should remain strong but the potential threat posed by Russia cannot be ignored. Relations between Ukraine and Russia have been somewhat strained lately and should Russia raise trade barriers, Ukraine’s exports and subsequently its economy could suffer.

As they strive to take full advantage of the most dynamic categories, the traditional producers of Mineral Water, Carbonates and Juice are all likely to diversify their product portfolios. This trend has been unfolding for some time with Pfanner Bar (a Juice, Nectars and Still Drinks producer) among a number of players to have diversified into the Iced Tea arena.

If Ukraine finally joins the WTO this year as expected, consolidation will undoubtedly continue. The domestic producers may currently enjoy a major share of the volume but this picture could well change as more overseas players enter the market.

Competition for shelf space has stiffened significantly of late and will become even fiercer as more products are made available. On-premise sales are also predicted to grow as Ukrainians eat out more and fast food outlets grow in popularity. 

Western values should also continue to shape consumer behaviour. The preference for traditional foods remains in many areas but consumer tastes are becoming increasingly cosmopolitan. Finally, the move towards healthier living shows no sign of slowing and is likely to further propel the healthily perceived categories.

Overall, consumption of soft drinks is forecast to advance by around 14% during 2007 with per capita consumption increasing in every category and segment. It will therefore become imperative for producers to identify and exploit the most profitable opportunities presented.

The 2007 Ukraine Soft Drinks Report, forms part of Canadean’s Annual Soft Drinks Service. For more information on the report, please contact Canadean on +44 1256 394224 or at


October 2006, BIZPRO produced the reports on eight sectors surveys: furniture; construction materials; textiles; clothing; meat processing and meat products; vegetables and fruits processing; confectionery; milk processing and milk products. The surveys were conducted by local marketing and analytical think-tanks by request of BIZPRO.

1. Sector Diagnostics: Furniture
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2. Sector Diagnostics: Construction Materials
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3. Sector Diagnostics: Textile Products
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4. Sector Diagnostics: Clothing Industry
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5. Sector Diagnostics: Confections
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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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For Buyers: new entry

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