Carbonates in Egypt

2021 DEVELOPMENTS

Manufacturers struggle to pass on cost increases to consumers

Rising raw material and transportation costs drove a significant increase in the unit price of carbonates during 2021. However, in a weak economic environment, manufacturers and wholesalers were not able to pass on the full extent of these cost increases to consumers.

On-trade demand rebounds but remains below pre-pandemic level

Conversely, having contracted by almost a third during 2020 largely as a result of COVID-19 restrictions, there was a revival in on-trade volume sales of carbonates during 2021. However, they remained well below their pre-pandemic level.

Pandemic forces Pepsi-Cola and Coca-Cola to adjust their marketing strategies

Pepsi-Cola Egypt / Alkan Bugshan and Coca-Cola Egypt dominate carbonates, accounting for more than 90% of off-trade value sales between them in 2021. Local player SinaCola continued to rank a distant third.

PROSPECTS AND OPPORTUNITIES

Urbanisation and population expansion will underpin growth

Off-trade volume sales of carbonates will rebound during 2022 and will exhibit vigorous growth throughout the forecast period, with population growth and urbanisation set to be the main drivers of this. However, mounting inflationary pressure will pose a threat to demand growth, particularly during the early part of the forecast period.

Prices will continue to rise over the forecasting period

On-trade volume sales will exhibit robust growth throughout the forecast period but will not return to their pre-pandemic level until 2025. As the threat posed by COVID-19 begins to diminish and daily life normalises, local consumers will spend less time at home and socialise more with friends and family in on-trade venues.

The leading players will continue to invest in local production

Companies such as Pepsi-Cola Egypt / Alkan Bugshan and Coca-Cola Egypt are expected to continue to invest heavily in their Egyptian business in order to ensure consistent and robust distribution networks, local manufacturing, and marketing and advertising campaigns. As the impact of the COVID-19 subsides, advertising and promotional campaigns will once again become a key driver in sales and will remain so throughout the forecast period.