This cost accounts for 15% to 20% of the final price of a bottle of mineral, table or spring water and adds to other expenses such as labels, packaging, employee wages and the actual price of the source water.
“If they hike the fuel excise duty, costs rise across the board. (…) We raised prices by less than 1%, we tried to swallow all the price hikes because we realized purchasing power is low and there’s nothing we can do about it,” said Radu Lazaroiu, managing director of Romaqua Group, the leader of the mineral water market, whose revenue stood at EUR133 million last year.
The bottler of the Zizin mineral water, too, tried to keep prices unchanged even though transportation cost increased.
“The transportation price in June was over 6% higher than in June last year. However, our product sale prices did not go up,” said Laura Lazar, chief executive and one of the shareholders of Apemin Zizin, the bottler of the Zizin mineral water brand.
“This was because we chose a policy of keeping our prices unchanged and at the same time boost sales volumes.”
Ioan Micula, co-owner of the European Food&Drinks group, which bottles the Izvorul Minunilor mineral water, says this step only served to burden manufacturers.
“Any new tax or tax hike has a negative impact. Any tax must be passed on to the consumer, because manufacturers have to raise prices otherwise they won’t survive,” the entrepreneur says.
The unfavorable weather conditions caused a decline in mineral water sales volume in the first half, while the sales value rose slightly.
“The retail bottled water market (excluding on-premise sales) saw a 3.4% in decline in volume in December/January – April/May 2014 compared with the year-ago period, according to Nielsen data. The market grew by 1.83% in value in the first half compared with the year-ago period,” said Andreea Constantinescu, marketing manager of Rio Bucovina.
Catalin Ardeleanu, chief financial officer of producer Azuga Waters, says this rise in value is because of the sale of more expensive products.
“This rise in price includes additional transportation costs, which in our industry stand at more than 20% of the final product price, caused by the introduction of the EUR0.07. The new prices also include the contract increases (the retailer contracts i.e.) of every year,” Ardeleanu said.
Some of the largest companies in this business do not think the second half will come with significant changes in terms of consumption, even with the hot days expected.
“I estimate the market will decline at the same rate as in the first half,” Ardeleanu says.
Romaqua’s Radu Lazaroiu, too, does not see major changes on the market in the second half and says that even if August and September are two hot months, a potential growth will be partly offset by the spending on school and winter supplies.
The bottled water market, which includes mineral, table and spring water, is estimated at about 1.4 billion liters a year or EUR350 million, according to the latest data available.
The largest companies on this market are Romaqua Group (Borsec), Coca-Cola HBC Romania (Dorna and Izvorul Alb), and Rio Bucovina (Bucovina).
(English version by Loredana Fratila-Cristescu)