Business

Russia’s exclusive beverage maker targets 50% of the market to fill the void left by Coke, Pepsi According to Reuters

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© Reuters. A view shows soft drinks bottles and cans at a factory of the Chernogolovka company in the town of Chernogolovka in the Moscow region, Russia July 28, 2022. REUTERS / Alexander Reshetnikov

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MOSCOW (Reuters) – As the world’s biggest beverage makers cut ties with Russia, local producer Chernogolovka is aiming to capture 50 percent of the country’s nearly $9 billion market share, he said. The airline’s owner told Reuters.

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

Chernogolovka, named after the suburban town of Moscow where it was founded in 1998, produces snacks, bottled water, herby lemonade, energy drinks and, since May, Cola Chernogolovka.

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

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

According to data provider Statista, revenue on the Russian non-alcoholic beverage market reached $8.8 billion.

While carbonated drinks made by Coca-Cola (NYSE:) and PepsiCo (NASDAQ:) are still available in Russia, they will disappear over time as existing supplies decrease, leaving local manufacturers have to step in.

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

Coca-Cola also suspended operations in March. In June, it said Coca-Cola bottler HBC AG and its existing customers in Russia were running out of supplies.

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

COLA PUSH

Newly launched cola brands, including Chernogolovka’s CoolCola and competitor Ochakovo, increased to 5% market share in the category in the first half of 2022, NielsenIQ Russia said.

“Our company is not in the cola segment,” Sakhnina said of an area that accounts for about 50% of the market.

“This year we entered this segment and this coincides with the exit of international companies from this market. So if we evaluate our prospects and ambitions, they are almost priceless. term.”

To meet the anticipated growing demand, Chernogolovka is building a 40,000 square meter manufacturing plant in the town. The facility will cost more than 3 billion rubles ($50 million) and its first phase is expected to be completed in March 2023.

Some additional demand comes from fast food outlets.

Chernogolovka began supplying soft drinks to Russia’s Burger King and KFC stores in April. Sakhnina said it is in talks to do the same for Vkusno & tochka, the McDonald’s (NYSE:) restaurant chain that was renamed after the world’s largest fast-food chain was sold to a licensed unit. local licensing, Sakhnina said.

Vkusno & tochka is looking for a new beverage supplier, as Coca-Cola is running out of supply in Russia, CEO Oleg Paroev told Reuters in June.

Vkusno & tochka did not immediately respond to a request for comment on any conversations with Chernogolovka.

Like all Russian companies, Chernogolovka faces supply problems after Western governments and companies targeted Russia with sanctions and restrictions, Sakhnina said, adding that aluminum caps and sticky labels is a specific problem.

However, the Moscow regional government has pushed for the inclusion of Chernogolovka on the list of companies producing important goods, allowing it to receive preferential loans in April and May.

Interest rates spiked to 20% at the end of February, and although they have since steadily fallen to 8%, Chernogolovka said there was a time when it was possible to borrow money to expand the fund at a discount of 10 percentage points.

Although Sakhnina does not rule out a stock market listing, she said growth is the top priority. And while acquisitions are possible, including the exit of Western companies, there have been no talks so far, she said.

“This is just the beginning,” Sakhnina said. “This market, if the competitive situation remains the same, one year from now it will be completely different, unrecognizable.”

(1 dollar = 60,1000 rubles)

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