June 7 2007, 18:33

PepsiCo purchased "Sandora": which impact should Ukrainian juice market anticipate?

The divisions of PepsiCo Inc., namely PepsiAmericas Inc. and PepsiCo announced the purchase of 80% interest of "Sandora" company, the leader of Ukrainian juice market, for $542 mln. PepsiCo plans to purchase the rest 20% of interest in November.

Pepsi company informs that "Sandora" is the largest juice producer in CIS; according to the assessments of the analysts of ""Agrooglyad: Vegetables and Fruits" journal", this company take control over nearly a half of Ukrainian juice market, working under several brands in different price segments. The periodical evaluates that the volume of Ukrainian juice market can grow up to 650 mln. liters in 2007.

PepsiCo considers this acquisition to be among the most successful ones. The company top managers say that juice market is growing by rather rapid rates in Eastern Europe; particularly, the market of fruit and vegetable juices grows 17% per year in Ukraine. This purchase is one of PepsiCo strategic steps, because the company decided to build up its presence on the world market of juices and other non-carbonated drinks. It emphasizes the dynamic demand growth in this segment. Also, this acquisition corresponds to another PepsiCo strategic goal to occupy a larger share of the international market.

The producing capacity of "Sandora" company includes the plant for fruit and vegetable processing and juice production (village Nikolayevskoye, Nikolayev region); juice producing plant (village Meshkovo-Pogorelovo, Nikolayev oblast); two fruit and vegetable processing plants (village Rodnikovoye, AR Crimea; village Kazachyi Lageri, Kherson oblast). The portfolio of the company trademarks consists of seven juice brands (Sandora, Sandora Classic, Sandora Exclusive, Sandora Fresh Berry, Sandorik, Sadochok, Dar) and two wine brands, "Olvia" and "Celebration Collection". More than 280 items represent the product assortment line.

Before selling the major interest, the main shareholders of "Sandora" LLC were the citizens of Lithuania Igor Bezzub and Raymondas Tumenas. They owned 45% of interest each. In 1995 they shared the start-up capital to implement the business idea of Sergey Sypko, the Professor of Nikolayev shipbuilding plant. At the present moment Mr. Sypko occupies the position of the General Director of "Sandora" company. He owned 10% of shares of the enterprise.

To the opinion of Andriy Yarmak, the Manager of ""Agrooglyad: Vegetables and Fruits" project", the money paid for the enterprise mirror the market realities. "Taking into account the political situation in the country, the enterprise sale for such a price can be considered as a very successful deal. According to our estimations, the turnover of "Sandora" company reaches almost $200 mln. on the background of a comparatively high profitability. The joint effect of the strong brands provides the company with almost monopoly on the juice market of Ukraine - this fact costs a very high price", the expert believes. According to the estimations of A. Yarmak, the left 20% of the company shares may go considerably expensive by the end of year, because the capacity of Ukrainian market continues growing by the sufficiently rapid rates.

The sale of "Sandora" company to one of the giants of the world beverage market may contribute to the further enterprise development, to the opinion of the specialists of ""Agrooglyad: Vegetables and Fruits" journal". Thanks to the coming strategic investor, the company can get the possibility to build-up the production capacities by means of the export growth; the enterprise is able to consolidate its position on the juice market. Also, "Sandora" company may possibly enter the other segments of the market of non-carbonated drinks.