Carbonates in the Czech Republic

PROSPECTS

Volume sales continue to stagnate in 2018

Rising consumer health awareness and increasing knowledge of the potential harmful effects of excessive sugar intake did not translate into a considerable decline in volume sales of carbonates in the review period. However, the demand for cola, lemonade and orange carbonates stagnated in the review period despite the improving economic situation and strengthening purchasing power.

Value growth is weakened by changing consumer habits

In recent years, there were changes in consumers’ shopping habits, with discounters becoming a more attractive channel in which to shop. This redirected volume sales of carbonates to these fast-developing chains, reducing the significance of independent convenience stores.

On-trade sales increase in importance for carbonates producers

In face of stagnating off-trade volume sales, carbonates producers started to redirect their attention to sales of carbonates in restaurants and other consumer foodservice channels, which are less likely to offer promotions. With the positive economic outlook for the forecast period, Czech consumers are expected to spend more money in horeca, giving carbonates producers the opportunity to increase their sales.

COMPETITIVE LANDSCAPE

Further consolidation expected

The Czech carbonates landscape is fairly consolidated, with the leaders Coca-Cola HBC Czech Republic, Kofola and PepsiCo CZ accounting for more than three quarters of off-trade value sales in 2018. The consolidation of the category hampers the development of smaller companies, which find it difficult to compete with the big players in terms of expansion and marketing practices.

Coca-Cola and Kofola continue to increase their shares

Coca-Cola HBC Czech Republic was the leading producer in carbonates in off-trade value terms in 2018, closely followed by popular local producer Kofola. Both companies steadily grew their shares over the review period by building an emotional bond and gaining consumers’ loyalty to their products, and by introducing new products to the market.

Weakening position of private label

In 2018, private label held a significant, albeit declining volume share in carbonates. Czech consumers’ rising incomes and strong competition from branded products continued to erode the private label share.

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