How to start a soft drinks business

Food industry Soft drinks

The volume of the Russian market of soft drinks today is about 2 billion liters in volume and about 20 billion rubles. in price terms.

According to statistics, over 75% of consumers drink sweet soda from time to time. But in recent years, many consumers have switched to more wholesome drinks - mineral water and juices. As a result, the market for soft drinks is practically not growing. According to marketing agencies, its volume is increasing annually by 1-5%.

Today, the profitability of this business is 10-20%. Only large plants that manage to sell large volumes of products can successfully work in such conditions.

A decent level for our manufacturers is the production of at least 150-200 thousand. 1.5-liter bottles of water per day. Compared to industry giants The Coca-Cola Company and PepsiCo Ink, this is not much. Lines with a capacity of 20 thousand bottles per hour operate at the factories of world industry leaders. But our manufacturers can only dream of such a volume of production. Indeed, in aggregate, all domestic producers occupy 43.8% of the market. Coca-Cola and PepsiCo account for 56.2%.

Despite the fact that their products are three times more expensive than drinks from our manufacturers, the new generation, under the influence of massive advertising, chooses Pepsi and Coke. The advertising budgets of world monsters in 2001 exceeded $ 100 million. Naturally, not even one of our manufacturers can afford to spend even a tenth of these funds on advertising. After all, the turnover of an average Russian company operating in this industry is $ 10-15 million per year.

Therefore, the main competitive advantage of our manufacturers has become an affordable price. Most of them work in the lower price segment, selling their soft drinks at 8-12 rubles for 1.5 liters.

By some estimates, by mid-2001, the number of soft drink producers in Russia exceeded one thousand. However, 90% of the entire segment of domestic drinks is occupied by a dozen large companies: Bobimex TM, Borodino, Dana, KS, Master, Onex, Ost-Aqua, Ochakovo and Ranova ". And the remaining manufacturers mainly provide only the needs of those cities or regions in which they operate.

Sales problem

The main problem for many Russian companies is the sale of products. Network trading structures usually work with Coca-Cola and PepsiCo, ignoring the products of our manufacturers. According to the owner of one of the companies, the cost of admission to supermarkets is $ 50 thousand for the presentation of one commodity position on the shelves.

Accordingly, in order to lay out 5-6 types of soda in the stores of one network, it is necessary to pay $ 250-300 thousand. Only large producers can spend such money. Moreover, it is not a fact that through chain stores for wealthy citizens it will be possible to sell a lot of cheap products. “Our lemonades do not interest visitors to supermarkets. In addition, networks may delay payment for products sold for several months, which also does not add optimism to us.

Thus, for the time being, the presence in chain stores for domestic manufacturers can be considered a kind of advertising campaign, which allows to increase brand recognition. And the cost of admission is an investment in the future.

At the same time, working with single stores is unprofitable. It is much more profitable to work with wholesale companies selling drinks in the regions.

Many companies in Moscow and the Moscow Region work on this principle. In the provinces, their drinks diverge well. Although they cost a couple rubles more than the products of local manufacturers, their quality is considered to be higher. Therefore, there is always a demand for “Moscow water” (as its consumers usually call it).

For manufacturers serving the needs of residents of small cities, it is advantageous to open company stores at factories.

An effective solution to the sales problem is to organize your own service for delivering goods to stores. This is how Coca-Cola works. Owning eleven plants in Russia, it has five dozen distribution centers. From there, products are delivered directly to customers. This experience is repeated by Russian companies.

Although the delivery service is “a very expensive pleasure that pays off only when large volumes are sold - at least 30 million liters per year, but this step will allow the company to go on a margin from competing compatriots.

Production Features

Investments in creating a modern high-tech production of soft drinks amount to $ 10-15 million. The payback period of investments is 5-7 years.

This market is highly competitive, so starting to work on it is now problematic. If there is no confidence in the sale of 100 million liters per year, there is no point in doing this business.

The main component of any drink is water. Therefore, when organizing your production, you first have to decide where to get it. There are two options: pump water from the water supply network or find your own “aquifer” and drill your own well. Many domestic manufacturers choose the second way. Natural water from a well-found source has a balanced composition and good taste. Whereas tap water first has to be cleaned to its original state, and then saturated with the necessary trace elements and salts. However, in the production of soft drinks and cola, the initial quality of the water and where it came from does not play a big role. Modern technology allows you to bring to the desired condition any water.

But those who use natural water in production make this fact their competitive advantage. Consumers are informed that the unique taste of the drink is due to the unique properties of water from a particular source.

Formation of the assortment of drinks by our manufacturers in most cases occurs according to the standard scheme. It is almost mandatory to include in the line of “old Soviet” tastes familiar to consumers since childhood: “Bell”, “Lemonade”, “Duchesse”, “Baikal”, etc. And some exotic drinks that are produced only by them are added this particular company.

Unlike foreign manufacturers, our companies mainly make soda not on sugar, but on sugar substitutes. The calculation is very simple: 1 kg of substitutes at a price of $ 7-11 replaces 200 kg of sugar. Therefore, the cost of lemonade on sweeteners is much lower.

Nevertheless, whatever components were used in preparing the drinks, the bottle is the most expensive, and not what is poured into it. The share of PET containers reaches 70% of the cost of cheap lemonade.

As a rule, the line of flavors for soft drinks consists of 20-30 items. Given that most of them are produced in different containers: 0.5, 1.5 and 2 liters, one can imagine how clearly the logistics system should be built at the enterprise.

Most manufacturers produce a full range of drinks year-round. But another way can be effective. For example, with the beginning of the summer season, when sales increase by 2–3 times, some companies reduce their range of tastes to 4–5 of the most sought after. This allows you to sell all products. And when the hot season ends, the company again begins to produce the entire range.

By the way, the season for manufacturers of soft drinks lasts only four months - from May to September.

Prospects for the market of mineral and drinking water

All experts unanimously agree that the volume of the market for sweet soda in the coming years will remain stable. Existing manufacturers will share the market pie among themselves, improving technologies and offering consumers new types of drinks, including juice and energy drinks.

While the segment of juice drinks is developing with great difficulty. Although they are sold very well all over the world, despite the fact that such soda costs more than usual. Our citizens do not recognize half measures: either 100% juice, or lemonade. Many companies trying to master it were forced to curtail or reduce production.

Much more attractive and promising from the point of view of investments than the market of "sweet soda" is the market of mineral and clean drinking water. Today its volume is 1.2-1.5 billion liters per year. Every year it grows by 20-25%, and this growth will continue for a very long time. So far, the average Russian drinks 6-8 liters of bottled mineral and drinking water per year, and only in Moscow this figure is twice as high. For comparison: residents of Western Europe annually drink an average of 60-95 liters of pure bottled water. Thus, potentially the Russian market could grow ten times.

According to experts, the market for clean drinking and mineral water will grow for another 4-5 years. At the same time, it will be divided between existing and new companies. Moreover, the struggle will be waged in all price groups.

Recently, the position of the non-carbonated drinking water segment in 19-liter bottles, which companies deliver to offices and home, has also been strengthened. Investments in such a project range from $ 100 thousand. Moreover, if the business is properly organized, investments can be returned in a year, because the competition here is still small. Famous brands can be listed on the fingers: “Royal Water”, “Clear Water”, “Holy Spring”.

Today in Russia over 700 names of mineral waters are registered. According to statistics, the most popular brands are Aqua Minerale, Borjomi, Narzan, Bon Aqua, Essentuki, Holy Spring and Novoterskaya.

Popular are those brands that have their own legend or a long history. Consumers want to buy real “key” or mineral water produced in an ecologically clean area. Therefore, it is important for the manufacturer to find some kind of product idea and convey it to the consumer.

At one time, the American John King and the Archbishop of Kostroma and Galitsky Alexander managed to do this. In 1993, in the vicinity of Kostroma began to pour water under the brand name "Holy Spring". Russians were enthusiastic about the idea that they were buying blessed water blessed by the Patriarch himself. As a result, over the eight years of the company's existence, it managed to occupy more than 17% of the market. And in 2002, Holy Spring was acquired by Nestle Waters, paying $ 50 million, according to UBS Brunswick Warburg analysts.

Drinking water is any water that has been pretreated.

During cleaning, unwanted mechanical impurities and all mineral salts are removed from it. After that, minerals are added to the water again to improve its taste. According to this principle of "artificial mineralization" make Bon Aqua and Aqua Minerale. But consumers do not really think about how this product was obtained and whether this water is natural. Competent advertising, multiplied by the number of impressions on the central television channels, does its job.

The factories located in the region of the Caucasian Mineral Waters are exclusively engaged in mineral water today. In other regions of the company, the entire assortment of water is bottled: sweet soda, mineral and drinking. Having the entire range of products, it is easier for the manufacturer to agree on cooperation with trade organizations.

Based on materials from the magazine My Business

* The article is more than 8 years old. May contain outdated data

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