EXCLUSIVE: Russian soft drink maker targets 50% market share to fill gap left by Coca-Cola and Pepsi

  • This content was produced in Russia, where coverage of Russian military operations in Ukraine is restricted by law.

MOSCOW, Aug 3 (Reuters) – As the world’s biggest soft drink makers cut ties with Russia, local producer Chernogolovka is targeting a 50% share of the country’s nearly $9 billion market, its boss told Reuters.

A mass exodus of Western companies due to sanctions and restrictions on Russia’s actions in Ukraine has created an unexpected opportunity for Russian companies and entrepreneurs.

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

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The private 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 8.5% at the end of 2021.

“We were, are and will be the leading Russian beverage producer,” Sakhnina said. “We hope and are working to gain absolute leadership in the Russian market.”

Revenue in Russia’s non-alcoholic beverage market stands at $8.8 billion, according to data provider Statista.

Although soft drinks made by Coca-Cola (KO.N) and PepsiCo are still available in Russia, they will disappear over time as existing stocks are depleted, leaving local manufacturers to step in.

PepsiCo suspended production and sales of soft drinks in Russia in March, one of many Western consumer brands that scaled back operations after Russia sent troops to Ukraine. read more

Coca-Cola also suspended operations in March. In June, he said Coca-Cola bottler HBC AG (CCH.L) and its existing customers in Russia were running out of stock. read more

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

TAIL PUSHER

Newly launched cola brands, including Chernogolovka and competitor Ochakovo’s CoolCola, rose 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 the departure of international players in this flavor. So if we assess our prospects and ambitions, they are almost limitless.”

To meet the expected increase in demand, Chernogolovka is building a 40,000-square-meter production facility in the city. The facility will cost more than 3 billion rubles ($50 million) and its first stage is scheduled to be completed in March 2023.

Some of the additional demand comes from fast food outlets.

Chernogolovka began supplying soft drinks to Russian Burger King and KFC outlets in April. It is in talks to do the same with Vkusno & tochka, the renowned McDonald’s restaurant chain that opened after the world’s largest fast-food chain was sold to a local licensee, Sakhnina said.

Vkusno & Tochka is looking for a new beverage supplier as Coca-Cola runs out of stock in Russia, Chief Executive Oleg Paroev told Reuters in June. read more

“We are currently considering options, choosing a provider that, based on taste, best suits our guests,” a Vkusno & tochka spokesman said Wednesday, when asked about any talks with Chernogolovka.

Like all Russian companies, Chernogolovka faced supply headaches after Western governments and companies hit Russia with sanctions and restrictions, Sakhnina said, adding that foil caps and sticky labels were a problem. particular.

However, the Moscow region government pushed for Chernogolovka to be included in a list of companies producing crucial goods, which allowed it to access preferential loans in April and May.

Interest rates rose to 20% at the end of February, and though they have since dropped steadily to 8%, Chernogolovka said at one point he was able to borrow money now being used to finance the expansion at a 10 percentage point discount.

While Sakhnina did not rule out the possibility of a public listing, she said growth was the priority. And while acquisitions are possible, including from Western firms leaving, 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, it will look completely different in a year, unrecognizable.”

($1 = 60,100 rubles)

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Information from Reuters; Edited by Matt Scuffham and Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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