The Coca-Cola Hellenic Bottling company said this week that it intended to buy all of Serbia's second largest mineral water bottler, Vlasinka, owned by domestic firm Simpo. The acquisition will be made jointly with CCHBC's parent firm Coca-Cola, which holds around a 25 per cent stake in CCHBC. No fee was disclosed.
A spokesperson for CCHBC last week named bolt-on acquisitions as an integral part of the firm's strategy and the company hopes to get a head start in Serbia by acquiring Vlasinka's southern production facilities at Surdulica and its Rosa mineral water brand.
CCHBC already has around a 50 per cent share of Serbia's carbonated soft drinks market, but Vlasinka is the group's first water business in the country. Other firms, including multinationals Danone and Nestlé, were reportedly interested in Vlasinka, which became a more attractive prospect after the bidding and legal controversy surrounding the privatisation of Serbia's leading bottled water firm Knjaz Milos last autumn.
Doros Constantinou, CCHBC's managing director, said: "Rosa has great potential for growth and we have had a strong track record in integrating new water businesses into the group as part of our water strategy."
Rosa's low sodium content, around 2.5mg per litre, also gives it the potential to be a very successful premium brand across the whole of Eastern Europe, amid the growing popularity for non-carbonated soft drinks driven by healthy living trends spanning both emerging and established markets.
Vlasinka claims Rosa contains less sodium than 55 analysed types of European waters of similar mineral composition, and that this helps to make the brand one of the healthiest in the world.
Non-carbonated soft drinks such as flavoured water and juice have already been significant in helping CCHBC's emerging markets sector to achieve higher volumes than the group's established markets business, though it remains only two thirds as profitable.
Both CCHBC and Coca-Cola are looking to non-carbonated drinks as a way of relieving pressure on their mature carbonated businesses, which experienced some growth problems in 2004. For example, Coca-Cola has just received clearance from UK food authorities to launch Europe's first cholesterol-lowering juice containing plant sterols.
"Non-carbonated beverages now account for 23 per cent of our total volume as we strive to offer consumers more choice and address health and wellness concerns," said CCHBC. Market analysts Euromonitor also recently predicted that water would be one of the most dynamic growth areas across Eastern Europe up to 2008.
Serbia and Montenegro sits alongside Bulgaria and the Ukraine as CCHBC's 'second group' within a rapidly progressing emerging market sector headed by Russia, Romania and Nigeria. The group's sales in Serbia and Montenegro crept up 1 per cent to €38.8 million during 2004, but the region as a whole showed double digit earnings growth.