Competition, coolers drive east European water sales
quenched, with all of the 15 biggest countries in the region
showing volume growth over the five years, according to a new
report from beverage industry analysts Zenith International.
In fact, bottled water sales in east Europe have seen double digit growth every year since 1998, and total volume sales reached nearly 8,800 million litres in 2003, according to the 2004 East Europe Bottled Water. Furthermore, average consumption of 27.3 litres per person is now close to double the level witnessed in 1998.
"Boosted by a warm summer for most countries, an increasing reliance on bottles in place of poor quality mains supplies and a growing appreciation of health and hydration, east European bottled water demand climbed by another 12 per cent in 2003," said Zenith research director Gary Roethenbaugh.
"Although it is still well behind the more mature west European market, east Europe has adopted many western trends. Still water has gained share from sparkling; larger retail sizes and water cooler activity has strengthened; and industry consolidation has become a regular feature across the region."
Sparkling water has a strong heritage in eastern Europe, and remains the most popular variety with a 61 per cent share of total volumes in 2003. Still water, however, has virtually doubled its share from 20 per cent in 1998 to 39 per cent in 2003, fuelled in no small part by the rising popularity of water coolers in all 15 countries.
"With coolers emerging and still water in PET becoming increasingly fashionable, east Europe's tradition of sparkling and highly mineralised water is steadily being overtaken," Roethenbaugh said.
Poland and Russia were the two most important bottled water markets in 2003, achieving a combined 44 per cent share. Russia was the region's fastest growing market, up 18 per cent in 2003, and should continue to expand following the entry of leading dairy group Wimm-Bill-Dann last year.
Furthermore, Russia has the lowest consumption per person in east Europe, less than half the regional average, giving additional scope for rapid growth there. The highest per capita consumption levels - over 70 litres per person - were in Croatia and Slovenia, where the populations are much smaller and the bottled water industry is more advanced.
Nor is there any chance of a slowdown in market growth any time soon, with the arrival of the world's biggest water groups likely o give further impetus. "The global 'big four' in bottled water - Coca-Cola, Danone, Nestlé Waters and PepsiCo - have all stepped up their commitment to east Europe," said Roethenbaugh. "With Nestlé Waters in the lead, these four companies accounted for one quarter of overall volume in 2003, but many successful local players remain a force to be reckoned with - such as Jamnica in Croatia, Karlovarske in the Czech Republic and Slovakia or European Drinks in Romania."
As many countries in central and eastern Europe join the EU on 1 May, interest in the region is likely to grow, with western companies seeking a greater foothold to tap the growing purchasing power of the new EU entrants - meaning that strong local players in the bottled water market will become takeover targets for the major players.
As the retail sector in the region also expands, own label bottled waters are also likely to play a more important role in the future, prompting an increase in advertising expenditure from brand owners, multinational and local alike. All of which should help fuel further growth, with Zenith predicting volumes of 13,000 million litres by 2008.
For details of how to order a copy of the Zenith report, click here.
