Carbonates in Latvia

PROSPECTS

Anti-obesity campaigns result in ongoing low off-trade volume growth for carbonates

Increasing health consciousness is motivating adults to make healthier choices for themselves and their families, more often choosing bottled water over carbonated drinks rich in sweeteners, caffeine and artificial additives. Such behaviour is partly fuelled by the public anti-obesity campaigns run by local authorities.

Low calorie cola and non-cola carbonates have brighter prospects

Carbonates players are expected to continue reshaping the category to better accommodate health and wellness trends. Consumers who are unwilling to completely give up the flavour of their favourite cola carbonates and lemonades are highly likely to continue using guilt-free low sugar, low calorie and preservative-free versions of iconic drinks as well as natural ingredients-based and functional carbonates.

Carbonates is unlikely to enjoy significant growth

While the hot summer of 2018 may have brought about a temporary improvement in sales of carbonates, a decreasing population, health concerns and the likely price hikes as the result of the expected introduction of the PET deposit system, in addition to the possible introduction of extra taxes for non-healthy foods in Latvia, will have a lasting negative impact on the volume growth potential of carbonates in the coming years. The general popularity of fitness and slimness as attributes of quality of life are expected to deepen the decline of the category unless producers reinvent their product ranges to leave behind the unhealthy image and better suit consumer needs and public health guidelines.

COMPETITIVE LANDSCAPE

Coca-Cola retains leading position

Coca-Cola HBC Latvia SIA, with its iconic, well-known, strongly supported and widely available brands, remained the leader of carbonates in 2018, gaining further off-trade value share. Given the massive resources and omnipresence of this global player, it is unlikely that its share is to decrease significantly in the coming years even with the anti-sugar trend.

Players search for new alternatives in light of anti-sugar trend

Along with strong attention to high sugar intake disadvantages, players are searching for alternative ways to win carbonates with new products. For example, in 2017 Amber Beverage Group started distributing Green Cola (by Green Cola Bottling International), reporting better-than-expected sales results and further assortment expansion in low calorie cola carbonates.

Share of private label products set to increase as Lidl expands in Latvia

It is not unusual for retailers in Latvia to offer their versions of cola carbonates and other carbonates under private label lines, addressing the needs of mostly price-sensitive consumers. With Lidl’s expansion in Latvia, the share of private label carbonates sold through retailers is expected to increase.

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