Soft drinks continued to record healthy growth in Azerbaijan in 2012, Euromonitor International says in its report over market research in Azerbaijan.
During 2012 total volume growth within soft drinks was higher than in 2008-2012 period CAGR and quality improvements and a widening product range provide a good base for expansion over the next five years, Azernews repoted.
The area benefited from the expansion of the domestic segment and the increasing interest of consumers in soft drinks as a whole. Overall, growth is being driven by the healthy characteristics of soft drinks, the diminishing quality of tap water, very hot summer weather, new product launches, wider product assortments and the dynamic development of functional beverages.
New product launches stimulate sales in 2012
Towards the end of the review period, both dynamic and less dynamic areas enjoyed an inflow of new brands. Carbonates, fruit/vegetable juice, bottled water and energy drinks areas recorded new product launches, with the domestic segment leading the way and triggering growth in soft drinks as a whole.
During 2012, domestic companies were able to offer their products at a reasonable quality/price ratio and strengthened their distribution channels. The offering of good quality lower priced products attracted consumers during the year.
Multinationals remain leaders but domestic players are catching up
Overall, soft drinks is a highly competitive area in Azerbaijan. The leading positions of major international players such as Coca-Cola (Baku Coca-Cola Bottlers) and PepsiCo (Mars Overseas Baku Ltd) can be attributed to very strong and well-established brands and local production. Coca-Cola and PepsiCo have long been the leading players in this area as they enjoy an early-mover advantage and have consistently offered innovations and new product launches (energy drinks, RTD tea, etc). However, domestic companies are catching-up with multinationals and hold strong positions across soft drinks, especially within fruit/vegetable juices. In addition, they also employ Western-style competitive and marketing strategies and offer products in different price segments and various packaging.
Despite the expansion of supermarkets/hypermarkets and the increasing number of kiosks in parks and on the street, independent small groceries remained the leading distribution channel in 2012 within soft drinks. However, it should be noted that the channel's total volume share fell over the review period. The main reason for this distribution trend is the convenient location of such stores. Moreover, such stores are the only distribution option in rural areas. However, modern retailers attract consumers by offering better prices for beverages, a wider range of products and promotions for leading brands.
Soft drinks to record positive total volume growth
Soft drinks will continue to develop over the forecast period. Due to market saturation and stronger competition within soft drinks, many companies will look to develop their existing brands by adding new flavours, changing formulations, introducing new packaging and making consistent new product launches. Strong marketing campaigns and rising consumer incomes will help to increase per capita consumption. RTD tea and sports and energy drinks are expected to grow in popularity and will benefit from heavy promotional activities for these products by manufacturers.