Information for fruit and vegetables business in CIS
Juice market tracks the route of beer market in Russia
Five years ago four local producers had the control over Russian juice market; there were no foreign companies operating there. Today the producers are the same, but the share of the international companies have exceeded 40% on market. The experts believe, in some years only two of these companies may possibly control juice production in Russia, Radio Svoboda writes.
The foreign companies have already purchased two out of four largest producers of fruit and vegetable juices in Russia. In 2005 American Coca Cola purchased "Multon" company (the producer of "Dobry", Rich, Diva and Nico juices), which occupied the second place on Russian market. Three weeks ago British investment company Lion Capital announced the purchase of "Nidan" company (juices "Moya Semya", "Dа!" and "Champion"), the fourth largest company in this industry. Some days ago the messages were released that the largest juice producer in Russia, "Lebedyanskiy" company (trademarks "Fruktoviy Sad", "Ya", "Tonus", "Privet", "Dolka", "Tusa Dzhusa") will soon be sold to Pepsi company, the main Coca Cola competitor.
According to the experts' evaluations, the share of "Lebedyanskiy" company allocates one third of Russian juice market. "Multon" company's share is approximately 22%, "Nidan" company's share - 18%, "Wimm-Bill-Dann" - 15%. "If we take into account Pepsi's share (the company has not purchased Russian companies yet, but its "Tropicana" brand occupies almost 2% of Russian market), we may say that more than 40% of juice market in Russia have already been under control of western companies", Natalia Zagvozdina, the Deputy Director of Analytical Department, investment company "Renaissance-Capital" says.
In many respects Russian juice market is developed according the same rules as the beer market did, where the foreign companies finally purchased all leading beer producers. However, unlike beer market, the process was not so rapid in juice market. Initially Russian juice market was less consolidated, Andrey Nikitin, the Analyst of "Uralsib" financial corporation says: "Foreigners were just waiting till the leading Russian companies "gain the critical mass".
Market leader - fruit mixtures
Five years ago the average Russian citizen drank up to 10-11 liters of juice per year. Today this figure is almost twice as high. The average juice consumption per capita is approximately 32 liters per year in the USA, 34 liters in Great Britain. The inhabitants of Eastern Europe drink 22 liters per capita, i.e. 20% more than in Russia, according to Victoria Grankina, the Analyst of investment company "Troyka-Dialog". "The volumes of the juice market in the USA are almost fourfold as large comparing to Russian market. But, the US market reduced 5%, and Russian market increased 13% in 2006".
Only one type of juices, orange juice, allocates more than 80% of juice market in the United States. In Europe three juices: orange, apple and tomato juices, share the same 80% of market. In Russia, the largest market share (37% of the total market volume in 2006) is represented by multi-fruit juices, i.e. made out of various fruits. Apple juice follows with 16%, orange juice has 14% and tomato juice has 8%. "In the whole, four major flavors - multi-fruit, apple, orange and tomato - represent 75% of the juices sold in Russia", Natalia Zagvozdina says.
The lion's share of the fruit and vegetable juices in Russia (and not only there) is produced on the basis of the shipped concentrates. In general, this is their route - for example, the producers harvest oranges and produce concentrate in Florida, or mango in Brazil. Than these concentrates are shipped to Russia where the juice manufacturers add water, pasteurize and pour the juice into bottles or packages.
More than 90% of all juices sold today in Russia are produced on the basis of the imported concentrates, A. Nikitin points out. Although Russian producers will probably increase the share of the national tomato and apple concentrates (the most part of them is supplied by China now), in the whole the total share of the concentrates of Russian origin will hardly exceed 20%, to the analyst's opinion. The thing is, tropic fruit juices represent more than a half of the market, but they just do not grow in Russia.
Cоса Cola and Pepsi
The share of the foreign companies on Russian juice market has already exceeded 40%; the experts forecast it to increase almost twofold in some years. Two out of four largest juice producers in Russia, "Multon" and "Nidan" companies, have been already sold. "Lebedyanskiy" company is the next for sale. The total share of these three companies allocates almost 70% of market nowadays.
One more member of "big four" is "Wimm-Bill-Dann" company; however, its juice segment is too integrated in the general structure of the company's business. Its sale apart from the segments of baby food and diary products seems impossible now, A. Nikitin thinks.
The development of the juice markets in many countries of the world has already resulted in just 2-3 players dominating, Natalia Zagvozdina adds. As a rule, they are large international companies. After American Pepsi company purchased "Sandora" company, the largest juice producer in Ukraine, the trend of globalization has been becoming apparent on the juice markets of CIS countries. "It is possible that in 5-7 years these markets will be shared this or that way between only two largest companies: Coca Cola and Pepsi", Mrs. Zagvozdina forecasts.