“Competitive promotional pressure refers to aggressive promotional activities carried out by our competitors (…) which we chose not to follow. Generally it is not a good idea to link promotional activity to bad weather,” Coca-Cola Hellenic representatives in Greece told ZF.
This decline shows how tough the battle for Romanian consumers’ budgets is, given that they continue to be cautious when they shop.
The market of soft drinks, valued at EUR1.8-EUR2.3 billion, is dominated by giants PepsiCo and Coca-Cola. A long way behind are local producers such as Romaqua and European Drinks. Annual consumption of soft drinks and bottled mineral water in Romania is around 130 liters, 43 liters of which are accounted for by Coca-Cola products. The giant has an around 30% market share, according to ZF calculations.
For the local bottler of Coca-Cola, the result of the first six months of this year is the biggest decline since 2010, when volumes fell by over 10%, shows a ZF analysis based on data in the company’s previous reports. At the time Coca-Cola blamed the decline on the austerity measures which reduced consumers’ confidence and their budgets.
Between 2007 and 2013, the best first half of the year for Coca-Cola was in 2007, when the company reported a double-digit rise in volumes sold. At the time Coca-Cola reports in Greece showed that the company’s profitability was rising significantly.
Slowly the financial crisis started to affect the giant’s sales. They went from rises of 8-9% in 2008 to declines of 8-9% in the first part of this year, according to a ZF analysis.
The company’s explanations have varied over the course of time, with the declines being blamed either on the unfavorable economic environment, on political uncertainties, or on pressure from competitors’ promotional activity.
Last year was the first in five years when Coca-Cola HBC recorded a turnover rise in euros, although volumes went up by just 1%.
The company’s turnover last year reached EUR435 million, up 6% in euros. This is the first rise reported by the company since 2008, when sales of Coca-Cola HBC started on a downward path.
(English version by Daniela Stoican)