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10 Jul, 2007 03:05

Coca-Cola starts battle for Russian juice market

Russian beverage group Aquavison becomes a major player on the soft drinks market – after its purchase by Coca Cola HBC.

The Hellenic Bottling Company – or Coca Cola HBC of Greece – is buying Russian beverage group Aquavision – making it a major player on the Russian soft drinks market.

Aquavision says its juices, smoothies and waters are all based on the best water in Moscow.

The company’s former owner – Health Tech Corporation – says in just four months, demand for its brand Botaniq exceeded supply.

That success has made the company a target for Coke, which craves a greater presence on the Russian market.  

“Beverage business in Russia has a unique situation. All industries, all sectors in FMCG are more or less controlled by multinational corporations. If you take a look at chocolate, diary etc., except of the beverages sector, because this sector is mainly controlled by originally Russian companies. We have been expecting that multinational corporations would not like to retain such an unfair situation, from their point of view,” explained Vahagn Manukyan, HTC Managing Director.

Four major local players control over 80% of Russia’s juice market. Coca Cola is the only international company to have a stake in one of these players – with a share of Moulton juice producer.

Analysts say, Coca Cola’s $US 250 MLN purchase of Aquavision, at an almost 50 % premium, confirms that large international players see potential for growth in Russia.

“Coca-Cola currently became unquestionable leader of the juice market and if we assume that Pepsi might want to follow, it means that such juice companies as Lebedyansky or Nidan could be attractive acquisition targets,”  Svetlana Sukhanova, UBS consumer analyst, predicts.

Russians drink only a third of the juice their European counterparts consume – and one seventh of water. Analysts say growing health consciousness – and rising disposable incomes are sure to attract other multinationals.