Tourists and multinationals drive soft drinks sales in Slovakia
since 1998, driven by increasing tourism and the arrival of the
multinationals, says a recent market report.
According to Euromonitor International the market for soft drinks grew by 5 per cent in 2003, with future growth likely to remain within that figure. Per capita consumption increased by 32 over the review period, whilst off-trade volume sales grew by 28 per cent during the same period. On-trade volume sales performed significantly better, increasing by nearly 42 per cent, due to a growing influx of tourists and the increasing number of cheaper products on offer.
Carbonates continue to hold the largest share of total sales of soft drinks in both volume and value terms, the report also says. Off-trade value sales of carbonates grew by 4.1 per cent in 2003, well below the rate seen in the previous year as a result of increased price competition.
Bottled water comes a close second in terms of total volume share. It is increasingly popular thanks to the introduction of new flavours, growing demand for still bottled water and the continuing strength of carbonated bottled water.
Plastic bottles seize the market
Plastic packaging rose in importance during Euromonitor say, accounting for some 93 per cent of all packaging of carbonates 2003, with the 500ml and 1,500ml bottles the most popular sizes across all soft drinks sectors.
The can format does not particularly appeal to Slovak consumers of carbonates and has almost completely vanished from retailers' shelves; however, it remains an important format for functional drinks and RTD coffee. Consumer preferences clearly show 500ml PET bottles to be the current hot favourite in Slovakia, with rising usage in carbonates as well as in bottled water.
Fruit/vegetable juice is sold in more traditional liquid cartons, accounting for 66 per cent of off-trade volume sales in 2003. This format rapidly lost share to both glass and plastic over the review period, however.
Packaging has begun to play an important role in the marketing strategy of the key players, with modern packaging having a noticeable impact on consumers' purchasing decisions. As a result, the report says, a lot of efforts in innovation have gone into packaging, often as part of a rebranding strategy for many producers.
Changing face of retail
Independent food stores (mainly small retailers, independents and cooperatives) lead in the distribution of soft drinks, accounting for 47 per cent of off-trade volume sales in 2003. However, the influx of multinational supermarkets and hypermarkets is a key factor in the overall merchandising and promotion of soft drinks in Slovakia, with a particularly strong influence on prices, both at producer and consumer levels.
The volume share of soft drinks sold through supermarkets/hypermarkets was 31.3 per cent in 2003. This share is expected to rise during in the coming years as small and independent retailers, particularly those in larger cities, find it difficult to keep up with the price competition from these larger retailers.
Euromonitor says that Off-trade sales of soft drinks are expected to grow by over 25 per cent in volume terms in the future,, driven by the increasing availability and range of products, intensified advertising and promotional campaigns, and a rise in consumer purchasing power.
Since 1998 some SKK4.8 billion (€120m) has been ploughed into the Slovak soft drinks market for various marketing activities, primarily by Coca-Cola Beverages and Pepsi-Cola. Local and regional producers responded to this and began investing more heavily as they grew stronger financially. Around SKK350 million was invested in the soft drinks market during 2002 and further investments are occurring in 2003, aimed at modernising and improving bottling and production facilities, making it possible to meet demand expected during the forecast period.
