Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exclusive-Russian soft drinks maker targets 50% of market to fill gap left by Coke, Pepsi

Stock Markets Aug 03, 2022 10:17AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
5/5 © Reuters. A view shows bottles and cans of soft drinks at a plant of the Chernogolovka company in the town of Chernogolovka in the Moscow region, Russia July 28, 2022. REUTERS/Alexander Reshetnikov 2/5

MOSCOW (Reuters) -As the world's biggest soft drinks makers cut their Russian ties, local producer Chernogolovka is aiming for a 50% share of the country's near $9 billion market, its boss told Reuters.

A mass exodus of Western firms due to sanctions and restrictions over Russia's actions in Ukraine has created an unexpected opportunity for Russian businesses and entrepreneurs.

Chernogolovka, named after the town outside Moscow where it was founded in 1998, makes snacks, bottled water, herby lemonades, energy drinks and, since May, Cola Chernogolovka.

The privately-owned company is more than doubling its business this year, its CEO Natalia Sakhnina said in an interview, and expects to reach a 30% market share within two years, up from around 8.5% at the end of 2021.

"We were, are and will be the main Russian producer of drinks," Sakhnina said. "We hope and are working on gaining absolute leadership in the Russian market."

Revenue in Russia's non-alcoholic drinks market totals $8.8 billion, according to data provider Statista.

Although fizzy drinks made by Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP) are still available in Russia, they are set to disappear over time as existing stocks are run down, leaving local manufacturers to step in.

PepsiCo suspended soda production and sales in Russia in March, one of many Western consumer brands to curtail operations after Russia sent troops into Ukraine.

Coca-Cola also suspended operations in March. In June, it said bottler Coca-Cola HBC AG and its existing customers in Russia were depleting stock.

Chernogolovka has almost doubled volume in the southern city of Krasnodar and increased capacity by 50% in Siberia's Novosibirsk so far in 2022 when compared to 2021, Sakhnina said.

COLA PUSH

Newly launched cola brands, including Chernogolovka's and competitor Ochakovo's CoolCola, jumped to a 5% share of sales in the category in the first half of 2022, NielsenIQ Russia said.

"Our company was not present in the cola segment," Sakhnina said of an area that accounts for around 50% of the market.

"This year we entered this segment and this coincided with international players in this flavour leaving. So if we evaluate our prospects and ambitions, they are almost limitless."

To meet the anticipated ramp up in demand, Chernogolovka is building a 40,000 square metre production plant in the town. The facility will cost over 3 billion roubles ($50 million) and its first stage is slated for completion in March 2023.

Some additional demand has come from fast food outlets.

Chernogolovka started supplying soft drinks to the Russian outlets of Burger King and KFC in April. It is in talks to do the same for Vkusno & tochka, the renamed chain of McDonald's (NYSE:MCD) restaurants that opened after the world's largest fast-food chain sold to a local licensee, Sakhnina said.

Vkusno & tochka is looking for a new drinks provider, as Coca-Cola is depleting its Russia stock, Chief Executive Oleg Paroev told Reuters in June.

"We are currently considering options, choosing a supplier that according to taste will suit our guests the most," a Vkusno & tochka spokesperson said on Wednesday, when asked about any talks with Chernogolovka.

Like all Russian companies, Chernogolovka faced supply headaches after Western governments and companies targeted Russia with sanctions and restrictions, Sakhnina said, adding that aluminium lids and adhesive labels were a particular issue.

However, the Moscow region's government pushed for Chernogolovka's inclusion in a list of firms producing crucial goods, allowing it to tap preferential lending in April and May.

Interest rates leapt to 20% in late February, and although they have since steadily decreased to 8%, Chernogolovka said it was at one point able to borrow money now being used to fund expansion at a discount of 10 percentage points.

While Sakhnina did not rule out the possibility of a stock market listing, she said growth was the priority. And while acquisitions are possible, including from departing Western firms, there have been no talks to date, she said.

"This is just the beginning," Sakhnina said. "This market, if the competitive situation remains the same, will look completely different in a year, unrecognisable."

($1 = 60.1000 roubles)

Exclusive-Russian soft drinks maker targets 50% of market to fill gap left by Coke, Pepsi
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Benjamin USA
Benjamin USA Aug 03, 2022 3:41AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Soviet are back!!
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email