global beverage forecasts march 2013-east europe

8/17/2019 Global Beverage Forecasts March 2013-East Europe

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Global BeverageForecasts March 2013

Chapter: East Europe

CREATED FOR: Aela Drago!"r# $ABM"ller

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© Canadean, 2000 - 2013


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Belarus

Packaged Water

Difficult economic conditions were largely resonsi!le for a "# decline in ackaged

water $olume in 2012% &till water demonstrates a !etter erformance t'an car!onated

and so leading domestic oerators 'a$e increased roduction of still water roducts,

trying to widen t'e a$aila!le range% (ore consumers are demanding non-car!onated

$ersions of oular ackaged water !rands and consider t'em to !e 'ealt'ier%

Belarus continues to decrease imorts of ackaged water and at t'e same time

leading roducers are trying to increase e)ort sales%

*n 2013 t'e decline s'ould slow to around +#% n imro$ed consumer mood s'ould

suort slig'tly !etter sales wit'in t'is, t'e most afforda!le soft drinks category%

Performance of still ackaged water in 2013 s'ould !e e$en !etter, wit' t'e decline

forecast to !e ust around 1#% .owe$er, t'e rat'er conser$ati$e Belarusian

consumers are likely to continue to refer car!onated water%

/rom 201, sta!le growt' will !e maintained t'roug'out t'e forecast eriod, !ut

dou!le-digit figures will not !e ac'ie$ed%

Bulk.D Water

*n 2012 t'e market declined !y around #, dri$en !y t'e difficult economic

en$ironment w'ic' resulted in many 'ome and office consumers stoing !uying

!ulk.D water% *n 2013 a slig'tly imro$ed consumer mood will 'el t'e decline slow

to +#% .ome deli$ery will de$elo at a muc' faster rate in 2013 and in t'e ne)t few

years t'e main oerators will continue to target domestic consumers% &ales to 'omes

will suort t'e category erformance in t'e foreseea!le future as roducers look for

new ways to e)and t'eir consumer !ase% 4'e market will not !e a!le to demonstrate

any growt' until 2015%

Car!onates

Car!onates declined !y o$er 6# in 2012 as t'e category remains under t'e influence

of t'e economic difficulties of !ot' roducers and consumers%

nly cola, k$ass, lemon-lime and tonic fla$ours were a!le to s'ow slig't growt',

following !rand suort from t'e main international oerator, w'ic' in turn encouraged

domestic roduction% t'er fla$ors declined or demonstrated flat erformance% *morts

of car!onates continued to decline%

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Performance of t'e category in 2013 s'ould !e !etter7 marginal growt' can e$en !e

e)ected% *mro$ed consumer mood and increased acti$ity !y multinational soft drinks

leaders s'ould suort t'is !etter erformance% 4'is forecast is !ased on an

e)tremely unsta!le economy wit' growt' or decline deendent on a num!er of

e)ternal and internal factors, suc' as t'e a$aila!ility of international credit and t'e

situation wit' inflation and de$aluation of t'e national currency in 2013%

4'e cola segment s'ould demonstrate !etter erformance and will remain t'e dri$er of

t'e category% 8emon-lime s'ould also !e a!le to secure some growt', due to suort

!y multinational oerators% t'er fla$ors will decline or demonstrate flat sales%

8ow calorie roducts continue to decline in Belarus% stee decrease in consumtion

in 2012 was due to lowered demand for remium roducts 9in Belarus most low

calorie drinks are remium:%

4'e category may !e a!le to return to sta!le !ut slow growt' from 2013%

;uice

dramatic 1# decline was reorted !y t'e uice category in 2012 and was to !e

e)ected in t'e current economic en$ironment% ;uice roducts are rat'er e)ensi$e

for Belarusian consumers, many of w'om 'a$e switc'ed to more afforda!le categories

in recent years% Producers 'a$e also tried to concentrate on roduction of more cost-

effecti$e roducts suc' as nectars and still drinks% Discount !rands erformed !etter,

alt'oug' t'is led to reduced rofita!ility for roducers% ll domestic oerators tried to

increase e)orts to neig'!oring markets, mainly uality are a ossi!ility in t'e coming years as roducers try

to !oost t'e roduction of more afforda!le uice roducts% 4'e category will only !e

a!le to return to low growt' from 201+%

=ectars

4'e nectars category was a!le to demonstrate imressi$e, for t'e current

en$ironment, growt' of more t'an 12# in 2012, after leading roducers switc'ed from

roducing uice roducts to nectars% s a rule, nectars are riced at t'e same le$el as

uice in Belarus% 4'e !etter erformance of nectars stems from t'e fact t'at nectars

are generally more rofita!le for roducers in Belarus%

4'e lack of afforda!le raw materials remains a significant ro!lem for roducers% *n

2011-2012, additional difficulties came from t'e ina!ility of many roducers to

urc'ase imorted concentrates and ackaging%

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*n 2013, +# growt' is forecast% *ncreased interest from maor national ;=&D

manufacturers s'ould suort a ositi$e erformance looking forward% Comanies are

set to relace t'eir oular uice !rands wit' nectars, w'ic' would suort !etter

category erformance in t'e s'ort-term% =ew roduct launc'es !y domestic and

international oerators are e)ected in t'e s'ort term% 4'e category s'ould !e a!le to

demonstrate sta!le growt' during all forecast years%

&till Drinks

lmost 1"# growt' was recorded in 2012 !y still drinks% &till drinks also !enefited

from increased interest of ;=&D roducers as well as traditional roducers of

car!onates and water, all looking for more rofita!le roducts in t'e current economic

en$ironment% 4'e increased attention aid to still drinks !y t'e leading international

and domestic oerators also suorted t'e great erformance% (any consumers are

also looking for more afforda!le alternati$es to uice and nectars gi$en t'e reduction in

sending ower%

furt'er "# increase in consumtion is e)ected in 2013% Wider a$aila!ility of more

afforda!le roducts recently launc'ed !y t'e leading oerators will suort t'e acti$e

and ositi$e dynamics of t'e still drinks category o$er t'e ne)t few years% Producer

interest in t'e category will continue to increase due to its otential to c'allenge uice

and nectars% 4'e category will !e a!le to maintain ositi$e dynamics t'roug'out t'e

forecast eriod%

&>uas'&yrus

# decline was seen in 2012% W'ilst some consumers continued to searc' for moreafforda!le roducts and started urc'asing syrus, t'e few acti$e roducers in t'e

category e)erienced difficulties and were una!le to increase roduction and sales%

&>uas'syrus, traditional during t'e &o$iet era, are losing oularity and soft drinks

market leaders are not in$ol$ed in t'is category%

similar # decline is e)ected in 2013% &ome roducers foresee growt', !ut t'is is

unlikely since many syrus roducers 9as a rule, smaller regional lants: are

e)eriencing financial difficulties and are una!le to increase roduction, ro$ide t'e

necessary suort for t'eir roducts, or switc' to t'e roduction of modern rtd

!e$erages%

*morted roducts are e)ensi$e for t'e main target audience and many consumers

9esecially t'e younger generation: 'a$e ne$er used traditional s>uas'syrus and

are unlikely to start, e$en in financially difficult times% 4'e category may return to only

marginal growt' in 2016%

/ruit Powders

/ruit owders $olume remained traditionally tiny and a # decline was recorded in

2012% =o interest from !ig international or domestic roducers or imorters was seen

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and soft drinks market leaders are not in$ol$ed in t'e category% mong domestic

oerators only ?rinitsa can !e seen wit' Ce$ita, !ut t'e interest of t'e comany in t'is

category 'as !een waning for se$eral years%

(any consumers consider fruit owders to !e a more afforda!le alternati$e to modern

rtd !e$erages, !ut t'ere are $ery few roducts a$aila!le on t'e market% 4'e category

image was seriously damaged in t'e 1"50s and 1""0s, w'en t'e market was full oflow >uality and e$en fake roducts% &ince t'en, it 'as !een $ery difficult to introduce

new roducts and !rands wit'in t'e category%

*n order to increase $olumes, serious in$estments need to !e made in terms of

category romotion% =o current oerator is in a osition to make suc' an in$estment%

4'e main oortunity is in e)anding t'e target audience, currently only t'e least

affluent consumers use $ery low riced fruit owders% *t is e)ected t'at t'e category

may start to s'ow some growt' from 201+%

*ced


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consumer education, and t'us consumers continue to a$oid t'is remium-riced

category%

*n 2013, t'e decline in $olume is redicted to slow to around 2# t'oug' an

imro$ement in t'e consumer mood may roduce a !etter erformance% &ort drinks

s'ould !e a!le to demonstrate some growt' starting from 201, w'en a reco$ery in

t'e economy and !etter urc'asing ower will !e a!le to suort !etter sales% &alesare likely to reac' a certain le$el and remain t'ere until new in$estment takes lace%

nergy Drinks

nergy drinks is one of t'e few categories w'ic' was a!le to demonstrate good

growt' in 2012 in site of t'e difficult economic en$ironment% round a 1# increase

in $olume was seen in t'e market, t'e ositi$e erformance suorted !y t'e

a$aila!ility of oular and more afforda!le domestic roducts%

$erall market $olumes remain small, 'owe$er, wit' energy drinks accounting for less

t'an 1# of t'e soft drinks market% 4'e category 'as significant otential for growt' in

future years% nergy drinks are e)ected to grow !y around # in 2013, muc' slower

t'an t'e dou!le-digit growt' rates of re$ious years% @rowt' will !e dri$en !y t'e

acti$ities of domestic layers 8idskoe Pi$o, (B= and international layers Coca-

Cola,


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t'e economy imro$es, consumers will switc' from traditional !asic roducts 9suc' as

w'ite milk in Belarus: !ack to ot'er, more modern commercial !e$erages% $erall, t'e

dynamics in t'e category deend $ery muc' on t'e states e)ort de$eloment lans%

8eading dairy market oerators 'a$e low or unrofita!le !asic and traditional Esocially

imortant roducts in t'eir ortfolios, and so t'ey will 'a$e to e)eriment wit'

alternati$e dairy roducts% Prices for suc' roducts are not yet su!ect to state

regulation and monitoring%

/la$ored milk declined !y a dramatic 2# in 2012% /la$ored milk is rat'er new to most

consumers in Belarus and only a few roducers manufactured it !efore t'e economic

crisis% *t t'us remains an easy roduct for consumers to e)clude in order to cut

'ouse'old costs% ll domestic roducers stoed roduction of t'e more e)ensi$e

am!ient milk otions, eg fla$ored milk, due to low demand7 furt'ermore, $ery few

fla$ored milk roducts imorted from


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.ot Coffee

sta!le erformance wit' ust a slig't decline was recorded in 2012% t 'ome

consumtion increased as a result of t'e economic crisis, as 'ot coffee traditionally

!enefits from suc' situations% *nstant coffee roducts continued to 'old t'e lions s'are

of t'e national 'ot coffee market%

rat'er flat erformance is e)ected for t'e ne)t few years% .ot coffee is already well

esta!lis'ed in Belarus and t'e market 'as !ecome saturated, so its growt' rosects

are limited% 4'e more afforda!le discount !rands may continue to increase t'eir s'are,

resulting in a decline in market $alue%

Beer

Beer declined !y nearly # in 2012 due to t'e continued decline in consumer

urc'asing ower, t'e fact t'at !rewers refer to e)ort !eer, lus an increase in ta)%/urt'er decline is e)ected in 2013% 4'e increase in ta)es and worsening economic

en$ironment may 'urt t'e industry, w'ile acti$e state suort for t'e industry and

restrictions on imorts will ro$ide some ositi$e de$eloment% 4'e market may return

to slow growt', !ut not !efore 2016%

Cider


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&irits

&irits saw growt' of more t'an 3# in 2012% 4raditional and oular, $odka

demonstrated sta!le growt'% mong t'e main reasons was t'e relati$ely low cost of

domestic $odka comared to ot'er alco'olic !e$erages, t'e rice of w'ic'

dramatically increased in recent years% 4'e s'are of $odka in o$erall siritsconsumtion increased to almost +0#% &tate aut'orities continued to suort t'e

!ottling of oular foreign !rands !y Belarusian comanies%

/urt'er growt' of around 3# is e)ected in 2013% Discount and more afforda!le

domestic roducts s'ould demonstrate a rat'er ositi$e erformance, w'ilst t'e s'are

of imorted roducts s'ould continue to fall% Domestic roducers will try to e)clude

e)ensi$e, remium roducts from t'eir ortfolios and concentrate on discount

!e$erages% Discount roducts from t'e e)ort ortfolios of Belarusian enterrises are

also !etter acceted !y foreign markets% 4'e de$aluation of t'e local currency will

make imorted roducts e$en more e)ensi$e% 4'e state aut'orities will continue to

suort domestic roducers, many of w'ic' are still state-owned%

/ortified Wine

/ortified wine demonstrated a dramatic decline of o$er 2# in 2012 as consumers

continued to switc' to 'ig'er >uality alco'olic drinks% *n Belarus t'e category is

traditionally reresented !y low cost, low >uality, domestic fruit-!ased wines%

*ncreased ta)es also made suc' roducts less attracti$e for consumers and

roducers% )cise on fruit-!ased fortified wines increased e$ery >uarter in 2012%

/rom 1 ;anuary 2013 roduction of low >uality fruit-!ased fortified wines ceasedcomletely in Belarus% /ortified wine $olume is forecast to decline !y almost 13# in

2013% Pre$ious strong state suort for t'e category 'as faded away comletely%

4'e economic difficulties of roducers 9most of w'ic' are smaller state-controlled

regional enterrises: and consumers alike created furt'er ro!lems for t'e market%

Continued decline is e)ected t'roug'out t'e forecast eriod%

/Bs

4raditional since t'e 1""0s, /Bs continued its dramatic decline wit' a 20# decreasein 2012% fter increases in ta)es on t'e category in 2011-12, roduction of most /Bs

!ecame unrofita!le%

4'e market is e)ected to c'ange dramatically during t'e forecast eriod, and more

afforda!le, discounted roducts will almost disaear%

&ome oerators may launc' more e)ensi$e, remium /Bs and as suc' t'e

imortance of !randing will increase% 4'e state continues its !attle against t'e national

/Bs market and oerators lan to find Enatural su!stitutes to /Bs, for e)amle cider

and !eer mi)es%

© Canadean, 2000 - 2013


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Bosnia-.erFego$ina

Packaged Water

Packaged water returned to growt' and was u !y o$er +# in 2012 dri$en !y

multiack romotions% &arae$ski ?iselak, as t'e leading layer recorded a slig't

increase suorted !y continuous secial ositioning in ?onFum% &trong, dou!le-digit

growt' was seen from Aitinka 9including its .oreca reco$ery: toget'er wit' 4esanski

kiselak and Princess t'anks to t'eir aggressi$e rice romotion in off-remise%

*morts are still in t'e 'ands of t'e growing Prolom wit' its 'ealt'y image and ?naF

(ilos, !ot' imorted from &er!ia and ;amnica from Croatia% 4'e only 48 acti$ity was

seen from &arae$ski kiselak and Aitinka% *n ackaging, +00cl P4 and 00cl P4

were t'e fastest growing ack tyes in still water, w'ile 200cl P4 was t'e fastest for

car!onated water%

/urt'er growt' of still water is e)ected to !e led !y larger P4 siFes, w'ile growt' in

car!onated water will !e led !y !rands from t'e 4esan region% 4'e ercetion of t'e

category as t'e most 'ealt'y among all soft drinks categories will assist t'e e)ected

3-+# year on year growt' rate until 2015%

Bulk.D Water

)treme snow in /e!ruary caused issues wit' water cooler deli$eries for two weeks

and led 2012 growt' to !e lower t'an e)ected at 2#% 8ow ricing was !e'ind t'is

categorys ositi$e erformance desite good >uality ta water and consumersrationaliFing t'eir sending% 4'ere is still strong leaders'i from Ai$ia !rand in


12/11312

4CCC continued to lead t'e category led !y Coca-Cola and fast growing &rite, /anta

&'okata and t'e $ery successful launc' of Coca-Cola ero% Cockta 'as fully

reco$ered, w'ilst t'e &ky !rand took ad$antage of its ermanent secial in-s'o

ositioning in ?onFum% .oreca is fully in 4CCCs 'ands wit' no real t'reat from

PesiCo, rangina 9after an initial resence in .oreca, it 'as now de$eloed in

modern trade wit' $olumes remaining modest: or Cockta% P4 domination of t'e

category is e$ident wit' only 4CCC glass in .oreca differing from t'is trend%

fter 3-# year on year growt' in 2011 and 2012 and 'ig'ly agreea!le weat'er, a

!roadly flat market is e)ected in t'e coming years led !y stronger o!esity and 'ealt'

concerns and lower car!onates oularity% dditionally, furt'er market consolidation is

e)ected%

;uice

dro of almost +# was seen in 2012% (ost of t'e smaller layers all !ut stoed

uice roduction, w'ile mid-siFe layers reduced t'eir fla$our ranges and remainedresent only in orange and ale fla$our% 4'e reason !e'ind t'ese decisions was

growing fruit concentrate rices and t'e already $ery 'ig' s'elf rice for t'e category%

4'ere is growing consolidation, w'ere leading !rands /ructal and ;uicy 9due to /ructal

!eing ercei$ed as a traditional >uality !rand and ;uicy !eing fully suorted in

?onFum retail: took s'are from smaller !rands% nly &ole (io !rand recorded s'ar

growt', !ut from a $ery low !ase%

4'e warmer weat'er in autumn caused some $olume migration to mo$e from uice

and nectars to t'e car!onates category% /res'ly s>ueeFed orange uice grew in s'are

in a declining .oreca market due to its 'ealt'y image%

/urt'er annual $olume dros of around 0%1m litres are e)ected in t'e long run as t'e

'ig' rices are e)ected to continue%

=ectars

.ard rice discounts led !y smaller local layers were not enoug' to comensate for

t'e lack of any new roduct inno$ation, 'ig' fruit concentrate rices, and e)treme

snow storms in /e!ruary w'ic' !locked deli$ery for two weeks% 4'ese conditions

resulted in an almost 3# dro in 2012% (ost layers suffered, t'e only ositi$e trend

was seen from !ot' .eok and .ercego$ina Aino 9w'ose 2011 $olume !ase was $erylow:% Aino uas slow reco$ery and Aitalis rice romotion re$ented a s'arer dro%

furt'er decline will !e seen in 2013 and onwards% 4'e decline will !e at a slower

rate, mostly t'anks to aggressi$e rice romotions and more affoda!le fruit

concentrate rices%

© Canadean, 2000 - 2013


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&till Drinks

&till drinks declined !y o$er 1# in 2012% 4'e main ro!lem remained de!t and low

li>uidity amongst traders wit' interest costs from o$erdue ayments consuming rofit%

Consumers mo$ed towards t'is category, w'ic' is less e)ensi$e comared to uiceand nectars, !ut strong marketing suort for ackaged water and car!onates

resented indirect category cometition and took $olume from still drinks%

8ower riced roducts wit'out fruit concentrate continued to take s'are% P4

dominates, e$en in .oreca c'annels, !ut t'e latest focus from a few layers mig't

c'ange t'e trend in t'e long run%

4'e decline will continue !ut will soften o$er t'e forecast eriod due to more focus

from t'e remium !rands and t'eir marketing funds%

&>uas'&yrus

Price sensiti$e consumer !e'a$iour mo$ed consumtion towards t'is, t'e least

e)ensi$e, fla$ored soft drinks category% *t increased !y 2# in 2012% 4'e lack of strict

>uality control ro$ides room for reduced sugarfruit content and t'us t'e rice

decreased% &>uas'syrus are traditionally consumed !y t'e older generation in rural

areas, w'ere glass is still $ery oular%

side from t'e dro in /ructal and Aitaminka, due to a lack of attention !y roducers,

ot'er layers were ositi$e esecially Aitinka, &ektra and Aitalis%

4'e mid-term s'ould see a sta!le erformance t'anks to a good osition in traditional

retail !ut a decrease in its traditional audience, t'e older generation, will lead to a

slig't dro in t'e long-term%

/ruit Powders

/ast reco$ery in 2012 9# growt': was led !y Cede$ita, w'ic' is now fully

consolidated following t'e Droga ?oliska ac>uisition, and !y t'e new !rand from

grokor, ;uicy Aita, and its strong B48 acti$ities 9in s'o romotions: w'ic' generated

additional $olume and attention for t'e entire category% 200g .DP is traditionally t'e

most dominant ack tye , !ut foil sac'et 1000g and +00g gained slig'tly, rimarily

due to low ricing%

&ingle-digit year on year growt' during t'e forecast eriod will !e dri$en !y growing

modern retail sales and category awareness from lanned B48 acti$ity from ;uicy Aita

and 48 acti$ity from Cede$ita%

© Canadean, 2000 - 2013


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*cedua$i$a 9.idroacti$e and


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Dairy Drinks

W'ite milk

m!ient w'ite milk continued its domination in 2012 and led t'e categorys 1#

growt'% @rowt' was led !y 8actalis and t'e recently oened ott dairy lant% .owe$er,leading (eggle saw a slig't dro after focusing on t'e uality and more

attracti$e ackaging t'e consumer !ase will widen slig'tly, !ut only soradically%

.owe$er, t'e $ery loyal and traditional consumer grou will stay marginal in terms of

$olumes%

/la$oured milk

2012 $olumes were almost t'e same as 2011% 4'e category is 'ig'ly rofita!le !ut

also 'ig'ly riced comared to w'ite milk, it was also imacted !y t'e dro in .oreca

sales% 4'is small category will continue to !e constrained !ecause of 'ig' rices and

concerns regarding o!esity and it will not grow $olume significantly o$er t'e forecast

eriod%

Drinking Jogurt

© Canadean, 2000 - 2013


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17/11316

Cider

&trong 48 marketing acti$ity and wide co$erage in t'e .oreca distri!ution c'annel

dro$e t'e oularity of t'e &omers!y !rand% *ntroduction of t'e new ear fla$our and

t'e de$eloment of ot'er distri!ution su!-c'annels dro$e t'is young category u to

reac' 1 m litres%

4'e !alance of t'e refres'ing taste, 48 acti$ities and also word of mout' created

ositi$e awareness and makes t'is category 'ig'ly fas'iona!le and romising for t'e

coming years% *t is foecast to gain an additional 0%2 m litres for eac' year after 201+%

Wine

4'ere are two different trends in wine consumtion% ne, w'ere rice sensiti$e

consumers mo$e towards ine)ensi$e ta!le wine w'ere t'e $olume is generated and

two, t'e growt' of a wine drinking culture suorted !y imro$ed >uality of regional!rands, esecially in t'e .ercego$ina region% 4'ese trends were affected !y

decreasing consumer urc'asing ower as disosa!le income declined and lower

.oreca sales% 4'ese two trends resulted in flat market in 2012 and a $ery slow

reco$ery is forecast in t'e coming years%

&irits

C'ea local !rands took s'are from remium riced imorted !rands, w'ic' recorded

dou!le-digit dros, !y taking ad$antage of t'e imro$ed >uality of small local

roduction wit' a $ariety of fla$ours 9>uince, aricot, lum:%

4'e s'ar dro in t'e .oreca c'annel and in remium riced imorted !rands

consumtion, led to a 3# decline o$erall in 2012% 4'e trend is e)ected to ersist in

coming years%

Bulgaria

Packaged Water

4'e category grew !y more t'an 2# in 2012 as t'e leading comanies s'owed

significant in$estment in marketing and distri!ution% 4'e suly of low riced roducts

increased and t'e 'ot summer additionally strengt'ened consumtion% 4'e slowdown

near t'e end of t'e year caused !y t'e effects of t'e indoor smoking !an and t'e

temorary lack of Bankia stock is e)ected to !e temorary as ackaged water

consolidation is likely to continue% 8ooking forward, t'e suly of !udget riced

roducts is likely to continue to grow, along wit' t'e steadily rising demand for suc'

otions%

© Canadean, 2000 - 2013


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Bulk.D Water

Bulk.D water saw 23# growt' in 2012 as consumtion in 'omes and small

!usinesses grew furt'er% 4'e growt' in t'e category is forecast to continue in 2013 as

t'ese trends are maintained% 4'e domestic and small !usiness c'annels are e)ected

to !ecome saturated in t'e following years wit' category growt' e)ected to slowdown as a result%

Car!onates

4'e category grew !y aroac'ing 3# in 2012 as t'e mainstream riced segment,

comrised rimarily of Coca-Cola $olumes, remained sta!le w'ile t'e !udget segment

continued to rise, mainly as it !ecame increasingly consolidated% 4'e slowdown at t'e

end of 2012 caused !y t'e effect of t'e indoor smoking !an is e)ected to !e

temorary as t'e !udget market continues to grow following t'e strengt'ening of =o$a

4rade% 4'is will !e couled wit' t'e e)ected sta!le to mildly ositi$e results of t'emainstream segment% 4'roug'out t'e forecast eriod, t'e growt' rate is e)ected to

gradually rise year on year7 s'ort-term growt' follows t'e consolidation of t'e !udget

segment, w'ilst in t'e long-term di$ersification of mainstream and remium otions

will roel consumtion%

;uice

Desite t'e mainstream rice le$el associated wit' most offerings, t'e category ended

its long-term negati$e trend in 2012% 4'e de$eloment was due to t'e sta!iliFation in

demand and tremendous marketing and distri!ution in$estments from t'e leadingcomanies% 4'e category is e)ected to remain in ositi$e territory t'roug'out t'e

forecast years as marketing in$estment is e)ected to remain 'ig' and t'e demand

for mainstream riced roducts is to !egin reco$ering% Jear on year growt' s'ould

accelerate as t'e category makes u $olumes lost during t'e economic crisis%

=ectars

=ectars roducts are generally lower riced t'an uice, and t'erefore !enefited e$en

more significantly from t'e tremendous increase in media in$estment seen in t'e

industry as t'e market remains $ery rice-sensiti$e% 4'e category is e)ected toremain ositi$e o$er t'e ne)t fi$e years as general demand slowly reco$ers and t'e

rice-sensiti$ity of consumers gradually softens% (uc' like uice, as t'e economy

imro$es, accelerated growt' can !e e)ected for t'e forecast eriod%

&till Drinks

&till drinks grew !y 3# in 20127 t'is was a slowdown after 2011 as t'e transfer of

$olumes from t'e more remium uice and nectars categories noticea!ly decreased as

t'eir $olumes sta!iliFed% fferings wit' fruit content continued to dri$e t'e category,

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gaining ground o$er !udget otions wit' no fruit content w'ic' were offered !y small

regional comanies% 4'e category is to maintain a sta!le !ut slow growt' until 2015 as

t'e leading comanies are e)ected to continue to take $olume from small

manufacturers%

&>uas'&yrus

marginal growt' of less t'an 1# was seen in 2012% 4'e rogress was a result of a

sta!le Aitanea erformance and t'e growt' of discount c'ains% Due to t'e limited

roduct offering, 'ig' rice oint er unit and greater oularity of ready to drink

roducts, t'e category is e)ected to retain its nic'e status o$er t'e following years%

Prolonged, al!eit slow, growt' is e)ected during t'e forecast eriod 'owe$er as its

resence in t'e e)anding modern trade s'ould counter t'e lack of traditional c'annel

distri!ution%

/ruit Powders

s t'e most !udget-centric category, fruit owders continued to s'ow su!stantial

growt' in 2012% 4'e 10# increase was due to t'e $ery rice-sensiti$e market situation

and t'e good distri!ution of category leader ?endy% s ready to drink $olumes are

e)ected to reco$er o$er t'e ucoming years, t'e growt' of t'e category is e)ected

to slow significantly%

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20/11320

desite t'e resence of some 'ig' rofile international !rands in t'e market% 8ow, !ut

accelerating, growt' will stem from t'e successes of domestic manufacturers%

nergy Drinks

Desite t'e remium ricing of leading !rands, t'e category rose !y aroac'ing 10#in 2012% 4'is ositi$e trend is e)ected to continue o$er t'e fort'coming years as t'e

leading international !rands gain furt'er, wit' sales dri$en !y t'eir $ery 'ig' !rand

awareness%

Dairy Drinks

W'ite milk $olumes slowed t'eir decline in 2012% 4'e e)ansion of P8 offerings into

P4 and t'e growt' of t'e leading Aerea !rand 'eled ackaged otions offset t'e

droing unrocessed 9illegally sold: $olumes, w'ic' were due to increased

go$ernment regulations% W'ite milk is e)ected to accelerate its decline temorarily in2013 as many small dairy farms w'ic' currently suly unrocessed milk to dairy

roducers are likely to close, otentially creating a temorary insufficient suly%

4owards t'e end of t'e forecast eriod, t'e de$eloment of rocessed milk is

e)ected to surass t'e dro in illegal, unrocessed milk, resulting in a cautious

growt'%

/la$ored milk saw a low growt' of under 3# in 2012, wit' a !etter erformance

e)ected for 2013 as leading !rands do well% Drinking yogurt reco$ered slig'tly in

2012, rising !y ust o$er 10#% (uc' like t'e marginal drinking yogurt category, o$er

t'e forecast eriod fla$ored milk $olumes are e)ected to remain growing, !ut low%

/ermented milk saw imressi$e growt' in 2012 as comanies e)anded t'eir H&<

and con$enience c'annel distri!ution, co$ering locations w'ere ayran cannot !e

reared onsite from soona!le yogurt% *n line wit' t'is trend, rising consumtion is

e)ected t'roug'out t'e forecast eriod%

&oymilk fared well in 2012 following slig'tly imro$ed modern retail distri!ution%

Aolumes, 'owe$er, are still negligi!le and are e)ected to remain so for t'e

foreseea!le future%

4'e fortunes of e$aorated milk and condensed milk c'anged little in 2012, wit' a

similar future e)ected% Bot' categories 'a$e $ery low oularity and $ery limiteddistri!ution in t'e country%

.ot 4ea

.ot tea drinking 'a!its in t'e country are less de$eloed t'an for 'ot coffee, wit'

!udget riced 'er!al $ariants generally referred% 2012 saw an increase of 1#% .er!al

otions are commonly used as a Eflu and cold remedy% 4'e category is likely to

continue its slow growt' as foreign drinking 'a!its gain oularity, ositioning 'ot tea

as a 'ot coffee alternati$e%

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.ot Coffee

4'e wide a$aila!ility of Eon t'e go offerings 'as limited t'e negati$e effect of t'e

indoor smoking !an, 'eling t'e category into ositi$e territory in 2012% .ot coffee is

$ery oular in t'e country and t'e growt' of Eon t'e go outlets o$er t'e ast few

years 'as 'eled er caita consumtion to remain >uite sta!le% Progression ise)ected to !e limited to a slow and steady growt' as coffee !ased !e$erages of

'ig'er ser$ing $olumes 9eg cauccino, latte, macc'iato: rise in oularity% *mro$ing

growt' may also !e seen as a result of t'e growing on-remise c'annel and $ending

$olumes%

Beer

Desite t'e effect of t'e indoor smoking !an on on-remise consumtion, t'e category

managed to stay in ositi$e territory in 2012 as t'e t'ree maor manufacturers

sustained $olumes t'roug' romotion of !igger, !udget riced P4 offerings% s rice-sensiti$ity remains 'ig', t'ese roducts are likely to continue growing, ena!ling t'e

category to sustain a mild growt' o$er t'e forecast eriod% *n addition, de$eloment is

anticiated to !e re$i$ed from 201 onwards as leading layers in$est in radler and

dark !eer roducts%

Cider

s for t'e most art cider $olumes consist of &omers!y sales, t'e category growt'

trend closely follows t'at of t'e !rand% @rowing from its first full year, 2012 saw a 'uge

increase, al!eit from a marginal osition% &teady !ut cautious growt' is forecast in t'emid-term%

Wine

Wine otential continues to !e limited !y 'omemade $olumes, wit' t'e indoor smoking

!an 'a$ing some negati$e effect on 2012 consumtion, as well as reducing any

increase in consumer demand o$er t'e forecast eriod% s time asses, a dro in

'omemade $olumes is e)ected as domestic commercial roduction de$elos%

/ollowing t'is, a slig'tly increasing annual growt' is e)ected u to 2015%

&irits

slig't decline of aroac'ing 1# was seen in 2012% 4'e indoor smoking !an is,

'owe$er, likely to 'a$e only a temorary effect on consumtion% Desite t'is, t'e 'ig'

oularity of 'omemade grae !randy continues to !e a !ig 'urdle for t'e category%

/ollowing a redicted dro in 'omemade $olumes in line wit' stricter regulation,

cautious increases are e)ected from 201%

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23/11323

e)ected following t'e economic reco$ery7 'owe$er t'e $olume reac'ed !efore t'e

economic crisis is not likely to !e ac'ie$ed !y t'e end of forecast eriod%

Car!onates

*n 2012, car!onates recorded a # increase, w'ic' was dri$en !y sweetened fla$oredwater, rice romotions, an e)cellent tourist season and fa$ora!le weat'er% &e$eral

no$elties, w'ic' entered t'e market in 2012, 'ad a ositi$e imact on consumtion

and on t'e de$eloment of some fla$ors%

*n 2013, weak economic conditions and low urc'asing ower will furt'er imact

consumtion and car!onates are e)ected to ac'ie$e only modest growt'% /actors

dri$ing consumtion will !e t'e oularity of sweetened fla$ored water, de$eloments

in tourism and intense marketing acti$ities% Car!onates are e)ected to take some

$olume from ot'er soft drinks categories due to rice discounts and oor economic

conditions, as consumers tend to turn to core categories%

8ong-term, t'e category is forecast to s'ow modest grow following t'e reco$ery of

economic situation% Car!onates 'a$e already reac'ed a 'ig' consumtion le$el%

;uice

;uice ended 2012 wit' 1# increase% Consumtion was dri$en !y t'e introduction of

new roducts and some romotional discounts, w'ic' stimulated consumers to s'ift

from nectars to uice% 4'e rice of orange uice is only incrementally 'ig'er comared

to t'e same nectars fla$or of remium !rands%

4'is category is redicted to s'ed $olume in 2013 due to no nota!le imro$ement in

t'e economic situation or consumer !uying ower% Premium rices reresent an

imortant o!stacle to consumtion as consumers are !ecoming more cautious a!out

t'eir sending% .owe$er, t'ere is otential for increased consumtion $ia tourism,

Wit' economic reco$ery a return to moderate growt' is anticiated, dri$en !y its

'ealt' aeal and 'ig' >uality%

=ectars

=ectars ended 2012 wit' +# contraction as consumers cut sending% $en a 'ot

summer and increased tourism could not re$ent t'e category from decline since

nectars are not ercei$ed as a refres'ing drink and attract remium ricing in on-

remise% .owe$er, t'e contraction was mitigated !y rice romotions and attracti$ely

riced two liter acks% 8ower riced !rands were also taking $olume and s'are from

Pri$ate 8a!el !rands%

=ectars is e)ected to contract furt'er in 2013, !ut less t'an in 2012 as t'e category

'as already suffered o$er t'e re$ious two years% 4'e category is going to !e furt'er

c'allenged !y weak economic conditions, rudent consumers and t'e t'reat of lower

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24/1132

riced soft drinks, suc' as s>uas'syrus% *n t'e long-term consumtion is anticiated

to grow following economic reco$ery%

&till Drinks

4'is category recorded an almost dou!le-digit decline in 2012 due to t'e economiccrisis, diminis'ing oularity and growing cometition from car!onated fla$ored water%

4'is is a consolidated market, w'ic' lacks no$elty and su!stantial marketing acti$ities%

&till drinks is e)ected to furt'er decline in 2013, as t'is category is on a downward

trend7 t'e contraction will additionally !e dri$en !y sendt'rift consumers% .owe$er,

new fla$ors are redicted to imro$e category erformance% *n t'e long-term, following

an economic reco$ery, return to growt' is e)ected7 !ut it is unlikely t'at still drinks will

ac'ie$e eit'er t'e oularity or $olumes t'at it enoyed !efore t'e economic crisis%

&>uas'&yrus

&yrus ended 2012 wit' o$er a +# contraction as e$en t'e ercei$ed $alue for money

and 'ot summer could not offset t'e imact of toug' economic conditions% &ales

erosions were not only recorded !y !rands !ut also !y Pri$ate 8a!el roducts as

se$eral !rands offered discounts or lowered rices to comete wit' Pri$ate 8a!el

roducts% &yrus consumtion is !ecoming increasingly !iased towards P4 !ottle%

4'is mature market, w'ic' lacks inno$ation, is anticiated to furt'er decline in 2013%

.owe$er, t'e contraction will !e less se$ere as t'e category is e)ected to !enefit

from its cost-effecti$eness in gloomy economic conditions% Contraction is redicted to

continue to t'e end of t'e forecast eriod due to its diminis'ed oularity andcometition from rtd soft drinks% .owe$er, t'e $olume will remain 'ig'%

/ruit Powders

*n 2012, t'e $olume of fruit owders s'rank !y 5# as consumers, roducers and

retailers faced furt'er uncertainty !ecause of t'e economic en$ironment% Cometition

!etween Cede$ita and ;uicy Aita continuedK !ot' !rands carried out nota!le marketing

acti$ities and romotional discounts, w'ic' 'ad a negati$e effect on t'e erformance

of smaller !rands and Pri$ate 8a!el roducts%

Prosects are not !rig't for 2013 and fruit owders is e)ected to e)erience furt'er

decline due to uncertain economic circumstances and rudent consumers% .owe$er,

t'e decline in consumtion could !e alle$iated !y furt'er marketing acti$ities from

Cede$ita and ;uicy Aita% /rom 201 a return to growt' is redicted after t'e economic

situation imro$es%

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26/1132

Dairy Drinks

*n 2012, consumtion of dairy drinks declined !y 3# imacted !y rudent consumers

watc'ing 'ouse'old !udgets due to t'e oor economic situation% *n general rices

remain 'ig', !ut t'ere were often romotional discounts and fa$ora!ly riced larger

acks and multiacks to stimulate consumtion% Drinking yogurt and fermented milkremained oular !e$erages, !ut consumers switc'ed to large family siFes, more

!asic roducts and Pri$ate 8a!el roducts%

*n 2013, dairy drinks are e)ected to remain around t'e le$el reac'ed in 2012 as no

nota!le reco$ery of t'e economic situation is foreseen% .owe$er, w'ite milk is

estimated to modestly contract due to t'e introduction of +# A4 on milk from ;anuary

2013 9re$iously t'ere was no A4 on milk:% Consumtion trends from 2012 will

continue as consumers try to reduce t'eir sending% W'en t'e economic situation

imro$es, a return to slow growt' is anticiated%

.ot 4ea

*n 2012, 'ot tea s'ed $olume due to t'e 'ot summer and conser$ati$e consumers7

'owe$er t'e contraction was only modest as t'is is a well-esta!lis'ed market% 4ea is a

traditional !e$erage, w'ic' is mostly consumed at !reakfast or as a curati$e in colder

mont's, so it is $ery muc' a seasonal roduct% *t is consumed su!stantially less t'an

coffee%

minor imro$ement in consumtion is estimated in 2013% (aor layers are acti$e in

new launc'es and !ringing new solutions to t'e market, so ositi$e de$eloment is

e)ected in t'e long-term%

.ot Coffee

.ot coffee consumtion ended 2012 1# !elow t'e re$ious year due to t'rifty

consumers% 4'e maority of coffee segments$arieties declined, as well as instant

coffee mi)es, w'ic' 'ad enoyed increased oularity until a year ago%

.ot coffee is forecast to see some decline in 20137 'owe$er as t'is is a well-

esta!lis'ed and traditional market t'e decline will !e only minor% /rom 201 a $ery

slow return to growt' is foreseen, following t'e e)ected economic reco$ery%

Beer

*n 2012, !eer contracted !y 3# due to declining urc'asing ower and weak

economic circumstances% Consumtion nota!ly weakened after t'e main summer

mont's, as t'e fa$ora!le imact of tourism finis'ed%


27/11326

ackaging% Pri$ate 8a!el roducts and lower riced imorts reresent growing

cometition to esta!lis'ed local !rands%

Consumtion of !eer is e)ected to face modest dro in 2013 due to more cautious

and careful consumers% .owe$er, it remains to !e seen if radler consumtion will

continue to !e as 'ig' as in 2012% 4ourism may 'old t'e key to growt' since in 2013 a

good tourist season is anticiated% nce t'e economy reco$ers, return to moderategrowt' is e)ected%

Cider

Cider lost some $olume in 2012 and e$en t'e fa$ora!le weat'er conditions and an

e)cellent tourist season could not us' consumtion, as radler is a strong cometitor%

*n 2013, t'is tiny category is e)ected to maintain t'e $olume reac'ed in 2012%

Potential for e)ansion lies in tourism, w'ile radler will remain its !iggest cometitor%

W'en t'e economic situation reco$ers, t'e category is anticiated to start growing

again% .owe$er, it will remain small%

Wine

Consumtion of wine s'rank !y nearly +# in 2012 as wine is on a downward trend

due to increasingly 'ealt' conscious consumers and declining urc'asing ower%

.owe$er, since consumers tend to !uy wine from unregistered roducers actual

consumtion is 'ard to monitor%

(odest contraction is e)ected in 2013 as consumers continue to rationaliFe t'eir

sending% Wine 'as otential for growt' in tourism7 !ut Croatia needs to intensify

international romotion of its wines to increase t'eir recognition and oularity% 4'e

market is also under t'e ressure of grey roduction, w'ic' is not registered% fter t'e

economy reco$ers return to growt' is anticiated, suorted !y de$eloments in

tourism%

&irits

*n 2012, sirits contracted !y 1# not only due to weak economic circumstances !ut

also due to more 'ealt' conscious consumers%

&irits will continue to coe wit' declining urc'asing ower and more 'ealt' aware

consumers and t'e category is forecast to record a modest dro in 2013% Inregistered

9grey: roduction reresents a furt'er t'reat to consumtion%


28/11325

CFec'


29/1132"

car!onates due to marketing suort and a rice war for market s'are in t'e segment%

/urt'er stagnation is t'us e)ected as falling sales of traditional B !rands are likely to

continue% lt'oug' new fla$ors and cola will attract more interest, t'is will only ust

offset t'e decline in interest for traditional !rands% 4'e category will !e stagnating from

201+ rat'er t'an declining%

;uice

;uice sales continued to !e 'ammered !y t'e second di recession, increasing rices

and t'e temorary ro'i!ition on sirits w'ic' ket customers away from .oreca

outlets% &ales lummeted again in 2012, t'is time !y 16# as consumers continued to

react to 'ig'er rices as !ottlers assed on increased costs% 4'e general worsening of

t'e economy and su!se>uent growt' in commodity rices 'as 'ad a more serious

imact on final rices o$er t'e last 12 mont's, imacting negati$ely on sales% ;uice

!ecame too e)ensi$e for CFec' customers, w'o again started to watc' t'eir

sending as t'e economic situation worsened% dditionally, young consumers

suddenly switc'ed to fla$ored low alco'ol !eers 9radlers:, w'ic' 'a$e !ecome animmediate 'it%

furt'er se$ere decline of +# is forecast for 2013 as consumers continue to

economiFe due to low confidence and increased rices% Weak consumer confidence is

likely to last t'roug'out t'e year alt'oug' on-remise sales are e)ected to !e

maintained in t'e second 'alf of t'e year if t'e general economic climate remains

sta!le% 4'e market will continue to decline t'roug'out t'e forecast eriod, alt'oug' t'e

fall will slowly mitigate as t'e economy gradually reco$ers%

=ectars

similar trend to uice was o!ser$ed in t'e nectars category% =ectars lummeted

again in 2012 !y 16# as consumers continued to switc' to ot'er drinks, esecially

fla$ored !eers and s>uas'syrus% =ectars 'as !een a declining category in t'e last

few years and 'as seen $ery little inno$ation as of late% 4'is category is 'ig'ly

deendent on .oreca sales w'ic' 'a$e !een 'it articularly 'ard, wit' most nectars in

t'is c'annel now riced a!o$e uice%

4'e forecast for 2013 is a continued decline of o$er #, wit' rice rises in ;anuary

stemming from increasing commodity costs and t'e A4 'ike% *n t'e current economic

climate consumers are more likely to forego nectars as t'ey are e)ensi$e andercei$ed to !e a lu)ury urc'ase% 4'e .oreca segment will continue to !e su!dued,

una!le to regain growt'% *n t'e long-term t'e market will continue to decline

t'roug'out t'e forecasting eriod%

&till Drinks

*n 2012 still drinks grew !y o$er 2#% 4'e fact t'at t'e category continues to grow

desite all t'e ad$erse influences is t'e result of t'e 'ig' inno$ation t'at t'is category

enoys% @rowt' was not as 'ig' as t'e re$ious two years 'owe$er7 t'e financial

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30/11330

ressure on !ottlers 'as slowed de$eloments, as comanies can no longer afford t'e

in$estment% Desite t'is, a num!er of new fla$ors were launc'ed, esecially !y ?(A

w'ic' re$ised its range of fla$ors on offer%

4'e forecast for 2013 suggests growt', 'owe$er t'e rate is to slow considera!ly due

to ersisting low consumer confidence% /ewer launc'es are e)ected as 'ard times

are starting to affect inno$ation across all categories% &tagnation will return from 201+onwards as a result%

&>uas'&yrus

&>uas'syrus is one of t'e !est erforming categories in t'e soft drinks market,

!enefiting significantly from low consumer confidence% ;ui )tra 4'ick syru

continued to !e t'e most successful !rand in t'e CFec' uas'syrus for added fla$or%

&>uas'syrus sales are likely to see a furt'er growt' of 3# as a result% .ig'er >uality

!randed roducts are likely to dri$e consumtion, and wit'in t'e Pri$ate 8a!el

segment demand is also likely to continue to incline towards t'e 'ig'er >uality

roducts% =ew !rands are additionally likely to aear during t'is year%

*n line wit' t'e imro$ing economy, t'e category will !egin to stagnate towards t'e

end of t'e forecast eriod, as consumers !egin to mo$e !ack to rtd drinks%

/ruit Powders

/ruit owders erformed oorly in 2012, declining !y almost 10#% 4'is was due to

consumers switc'ing from t'ese traditional roducts, w'ic' 'a$e lacked inno$ation for

many years, to s>uas'syrus% 4ang, t'e dominant !rand in t'is category, started to

lose $isi!ility in modern retail stores as ?raft /oods neglected romotion%

s a result of t'e ositi$e erformance of s>uas'syrus, fruit owders are likely to

see furt'er decline in 2013% Inless new !rands or inno$ati$e fla$ors are introduced to

t'e market, t'is category is likely to continue to s'rink in t'e long-term% =eit'er

imorted !rands nor 4esco Pri$ate 8a!el 'a$e managed to attract attention so far'owe$er, suggesting t'at no new acti$ity is anticiated%

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31/11331

teas are currently attracting attention, !ut t'eir s'are in t'e total icedrtd tea drinks

market remains small%

s t'ese !e$erages are mainly remium roducts, t'e category is going to continue to

!e affected !y t'e current slum in consumer sending as its rice ositioning

continues to kee sales in c'eck% &ales are likely to slig'tly reco$er as new fla$ors

and secial romotions are e)ected7 t'ese will dri$e sales !y well under 1# in 2013%

4'e categorys success will remain $ery sensiti$e to weat'er and inno$ation in t'e

forecast eriod% Aery marginal growt' is e)ected from 2013 onwards 'owe$er due to

increasing consumer confidence%

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32/11332

in 2012 as t'e comany reduced rices% &emte) sales were also u as it enoyed

focused marketing !y ?ofola, esecially t'roug' .oreca outlets%

2013 is forecast to e)erience anot'er year of growt', u !y +#% 4'is will !e dri$en !y

increased romotions from t'e fi$e main layersK


33/11333

e)anding sales of its !rands% 4raditional drinks suc' as fermented milk are consumed

!y t'e older generation, and t'us t'e segment is marred !y natural decline7 young

consumers, w'o follow t'e wellness trend, seem to ot for t'e new generation of

cultured roducts% s consumers continue to !e rice sensiti$e, it is likely t'at 'ig'er

rices will 'a$e a negati$e effect on o$erall sales of drinking yogurt t'roug'out t'e

forecast eriod% 4'e decline will ease off towards t'e end of forecasting eriod

'owe$er as t'e demand from certain demogra'ics will stay solid, wit' marginalgrowt' e$en a otential%

.ot 4ea

.ot tea grew !y 2# in 2012% Desite economiFing consumers, sta!iliFation in 'ot tea

rices 'eled to encourage imorts 9mainly green teas from C'ina: w'ic' were a !ig

dri$er in o$erall category growt'% @reen and fruit teas continue to !e oular wit'

younger consumers due to growing 'ealt' awareness%

4'e forecast for 2013 anticiates furt'er growt' of 1#7 demand will !e dri$en !y fruitand green teas due to 'ealt' awareness% &ecial offers and s'o romotions will

continue to retain consumer interest% 8ong-term demand will sta!iliFe as consumtion

is dri$en !y 'ealt' awareness, !ut temered !y t'e growt' of 'ot coffee, w'ic' will

steal s'are of t'e 'ot !e$erage market% 4'e fi$e year C@< t'erefore is for a flat

erformance%

.ot Coffee

Coffee culture is art of t'e CFec' culture and renewed interest in 'ot coffee 'as !een

dri$en !y t'e West uroean re$i$al of t'e !e$erage, w'ic' is now !eing coied !yt'e younger generation% &ales in 2012 were down !y o$er 2# 'owe$er due to t'e

deteriorating economic situation%

decline of less t'an 1# is anticiated in 2013, as t'e dou!le di recession will

continue to cur! consumer sending% .ig'er coffee rices will also damen any

furt'er growt'% &ecial offers and romotions in retail outlets will continue to retain

consumer interest% *n t'e long-term, sta!ility followed !y small growt' from 201+

onwards is e)ected as t'e increase in oularity amongst young consumers is

!oosted !y t'e imro$ing economy%

Beer

4'e !eer category continues to !e re$i$ed !y sales of fla$ored !eers suc' as

&taroramen cool lemon and graefruit launc'ed earlier in 2012% lt'oug' all maor

!reweries 9wit' e)cetion of Budeo$icky Bud$ar: launc'ed t'eir $ariants of fla$ored

!eers, &taroramen continues to maintain +0# market s'are of t'e radler segment%

Beer sales in 2012 were u !y almost 3#% s'ift towards off-remise sales continues,

wit' consumers now !uying less !eer on-remise and drinking more at 'ome% 4'e

maority of !reweries increased t'eir rices in H-12 in anticiation of increased A4

rate from ;anuary 2013%

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4'e forecast for 2013 anticiates a sta!le !eer market% 4'ere will still !e 'ealt'y

demand for fla$ored $ariants, 'owe$er growt' will !e cur!ed !y t'e effects of t'e uro

crisis as consumers send cautiously% n-remise consumtion will !e slig'tly down

as consumers s'y away from u!s, w'ile off-remise $olumes are likely to grow at a

slig'tly slower rate t'an last year, dri$en !y !eer mi)ers, fla$ored !eers and lager 11

!rands% *n t'e long-term 'owe$er, 'a!its are e)ected to c'ange as consumers

switc' to ot'er !e$erages once t'e no$elty of fla$ored !eer wears off% 4'is isesecially t'e case for t'e younger generation, and will !e a contri!uting factor in t'e

on-going stagnation of t'e category%

Cider

Cider is an emerging category% *t 'as !een introduced to t'e CFec'


35/1133+

slowly to reco$er towards t'e end of t'e forecasting eriod as 'ig'er rices will

continue to in'i!it demand%

/ortified Wine

4'e category was negati$ely affected !y t'e temorary ro'i!ition like ot'er alco'olicdrinks% /ortified wine 'as $ery little recognition and t'ere is no esta!lis'ed drinking

'a!it, w'ic' kees sales of t'e category minute% Decline was seen in 2012, and is

e)ected to continue until 2016%

(inimal growt' of 1# is e)ected from 2016% Consumtion will !e dri$en !y slowly

increasing recognition% /ortified wine will, 'owe$er, stay $ery marginal, as interest will

remain $ery limited%

/Bs

4'e category was negati$ely affected !y t'e temorary ro'i!ition in 2012% /Bs 'as

$ery little recognition amongst consumers, and t'ere is no esta!lis'ed drinking 'a!it

w'ic' kees sales tiny% W'ilst $olumes declined !y around 13# in 2012 t'e annual

total $olume remained at around 'alf a million litres%

*n 2013 t'e trend of slow decline is likely to continue% /Bs will stay $ery marginal, as

consumer interest continues to !e $ery limited% 4'e initial decline due to declining

consumer confidence will ease off towards t'e end of forecasting eriod 'owe$er, as

t'e demand from loyal consumers will stay solid%

stonia

Packaged Water

Packaged water sales $olumes grew 1# in 2012, dri$en !y an imro$ing economy

and increasing consumer urc'asing ower% cooler summer comared to re$ious

years led to lower $olumes t'an e)ected%

gradual 1# year on year growt' is forecast as t'e economy is e)ected to steadily

imro$e% .owe$er, rising inflation and t'e imro$ing image of ta water will kee t'e

increase in consumtion at low le$els% 4'e market will remain rice-sensiti$e as

growing costs kee consumer urc'asing ower wit'in c'eck% &ales of low riced

Pri$ate 8a!el ackaged water are e)ected to continue to increase as consumers

seek $alue for money%

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Bulk.D Water

Bulk.D water consumtion increased !y 3# in 2012% 4'e gradually imro$ing

economy 'as led to t'e growt' in sales $olumes as u!lic and ri$ate sector sending

'as increased in line wit' @DP growt' 93%+#:% .owe$er, cooler temeratures during

summer restricted t'e growt' rate of !ulk.D water consumtion%

Aolumes are redicted to 'a$e a little o$er a 2# C@< o$er t'e ne)t fi$e years as t'e

economy continues to make furt'er gradual, yet steady imro$ements%


37/11336

4'e decline in nectars consumtion is forecast to slow and t'en turn around from

201, as trading down to lower riced alternati$es is e)ected to reduce7 a steadily

imro$ing economy is redicted w'ic' will 'el increase consumer !uying ower% 4'e

larger siFed family acks will remain oular and new fla$or !lends will increase

consumer interest, returning t'e category to growt'%

&till Drinks

&till drinks consumtion grew 3# during 2012% Consumers continue to c'oose more

afforda!le still drinks as comared to uice and nectars due to $arious fla$ors and

c'oices a$aila!le w'ic' attract t'e consumer eye% 4'e oularity of t'e family siFed

200cl carton, offering lower rices er liter, 'as also contri!uted to growt' in still

drinks% W'ile t'e category 'as managed to grow, it 'as not !een an easy task due to

e)cetional growt' in 2011, w'ic' was t'anks to t'e success of t'e t'en newly

introduced ura /res'%

Consumtion of still drinks is forecast to grow wit' a C@< of ust o$er 1# o$er t'ene)t fi$e years, as trading down slows due to increasing consumer urc'asing ower

ena!ling consumers to afford 'ig'er riced uice and nectars% 4'e 200cl carton will

remain oular and 'el consumtion of still drinks to grow%

&>uas'&yrus

4'e consumtion of s>uas'syrus increased 1# in 2012% Consumers feeling t'e

effects of inflation enoyed t'e afforda!ility of s>uas'syrus, 'owe$er, a cooler

summer lowered t'e growt' rate%

&>uas'syrus sales are forecast to grow wit' steadily year on year at 1#% Desite

imro$ements in t'e economy, consumers will remain rice-sensiti$e and will continue

to consume lower riced s>uas'syrus% general lack of romotional acti$ity is

e)ected to continue wit'in t'e category and will not assist t'e rate of growt'%

*ced


38/11335

&orts Drinks

&orts drinks continued its uward trend, wit' # growt' in 2012% *mro$ing

consumer !uying ower and t'e introduction of new roducts 'a$e dri$en sales%

@rowt' rates are 'owe$er lower t'an t'e re$ious year due to inflationary ressure on

consumers and a lower t'an e)ected @DP growt' rate%

C@< of aroac'ing # is forecast for sorts drinks o$er t'e ne)t fi$e years as

consumer urc'asing ower increases furt'er and t'e afforda!ility of locally roduced

roducts lead to growt'% 4'e category $olume is small so t'is growt' is off a relati$ely

low !ase%

nergy Drinks

nergy drinks consumtion increased !y 6# during 2012% 4'is was due to t'e

afforda!ility of locally roduced energy drinks and acti$e new roduct launc'es w'ic''a$e 'eled to maintain consumer interest in t'e category%

4'e continued reference for more afforda!le locally roduced energy drinks is

e)ected to fuel growt' in t'e category, wit' a C@< of aroac'ing # forecast o$er

t'e ne)t fi$e years% 4'e category will continue to 'a$e acti$e new roduct

de$eloment w'ic' will 'el stimulate $olume growt'%

Dairy Drinks

4otal dairy drinks consumtion grew 1# in 2012 due to imro$ing consumer

urc'asing ower, 'owe$er, inflationary ressure 'indered t'e growt' rate% W'ite milk

sales $olumes were flat wit' slig't growt' in 2012, due to t'e main dairies fre>uent

rice romotions and cometition for market s'are% /ermented milk consumtion

increased 2# w'ile drinking yogurt saw minor growt'% Bot' fla$ored milk and

condensed milk $olumes remained flat%

Dairy sales are e)ected to remain rat'er flat as inflation us'es costs u and

reduces any gains in t'e economy% W'ite milk sales are forecast to see $ery small

year on year growt' as imro$ements in t'e economy will !e negated !y inflation7

dairies will 'a$e to ass on rising costs and raise rices% /ermented milk 'as a

forecast C@< of 1# o$er t'e ne)t fi$e years, as t'e category remains art ofstonian culture and increasing consumer urc'asing ower will dri$e $olume growt'%

Drinking yogurt $olumes are e)ected to remain flat% /la$ored milk and condensed

milk will continue to occuy nic'es and consumtion is likely to remain flat%

.ot 4ea

.ot tea consumtion remained flat during 2012% Desite imro$ing consumer

urc'asing ower 9'ot tea was seen as a relati$ely afforda!le otion during t'e

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economic crisis:, consumers 'a$e remained >uite rice-sensiti$e and continued

drinking 'ot tea% *n addition, t'e colder winter comared to 2011 'eled t'e category%

4'e forecast consumtion of 'ot tea is flat wit' a $ery slig't decrease as consumer

urc'asing ower will imro$e slig'tly, wit' furt'er imro$ements in t'e economy

redicted, and consumers switc'ing to ot'er soft drinks%

.ot Coffee

.ot coffee sales $olumes were 2# 'ig'er in 2012 t'an in 2011 as consumer

urc'asing ower increased and allowed consumers t'e a!ility to afford 'ot coffee

drinks% &ales $olume growt' was aided !y t'e imro$ements in on-remise sales,

dri$en !y 'ig' tourism le$els and increases in consumers e)enda!le income%

.ot coffee consumtion is forecast to grow steadily, wit' a C@< of aroac'ing 2#

o$er t'e ne)t fi$e years% 4'e imro$ing economy will gradually imro$e consumer

urc'asing ower and t'e anticiated 'ig' tourism le$els will 'el to dri$e category

sales%

Beer

Beer $olumes grew 1# in 2012 as t'e imro$ing economy increased consumer

urc'asing ower% Consumers remained rice-sensiti$e 'owe$er, and fa$ored more

afforda!le locally !rewed mainstream !eer%

Beer consumtion is forecast to remain flat for 2013 and t'en see slig't growt' in t'e

coming years7 w'ile consumers are e)ected to enoy gradually imro$ing urc'asing

ower, !eer is reac'ing its consumtion limits and t'us growt' is restricted% 8ower

riced mainstream !eer will continue to !e fa$ored and t'e anticiated 'ig' tourism

le$els will 'el to maintain sales $olumes%

Cider

Cider consumtion continued to grow, wit' a 3# increase recorded during 2012%

4rading down from 'ig'er riced alco'olic drinks and consumers e)loring new cider

roducts 'as fuelled t'e growt' in cider $olumes%

Cider is likely to remain a fas'iona!le alco'olic drink, wit' a C@< of 3# forecast for

t'e ne)t fi$e years% Consumers will continue to switc' to more afforda!le cider from

ot'er alco'olic drinks and new roducts will maintain consumer interest in t'e

category%

Wine

Wine consumtion increased !y well o$er 3# in 2012% 4'e growt' was dri$en !y

increasing consumer urc'asing ower and consumers trading down from 'ig'er

ta)ed sirits%

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C@< of 2# is redicted for wine sales $olumes o$er t'e ne)t fi$e years%

Continuing imro$ements in t'e economy and trading down from 'ig'er ta)ed sirits

are e)ected to lead to t'e steady growt' in wine $olumes% .owe$er, t'e growt' rate

will !e lower t'an in re$ious years, as consumers will face rising costs caused !y

inflation%

&irits

&irits consumtion grew 1# in 2012 due mainly to increasing consumer urc'asing

ower% 4'e growt' rate 'as slowed due to t'e go$ernments on-going 'ig' ta)ation of

sirits%

&irits sales $olumes are forecast to remain flat for 2013 and t'ereafter s'ow gradual

declines of less t'an 1# year on year%


41/1131

.ungary

Packaged Water

Desite declining consumer urc'asing ower, ackaged water saw growt' of +# in

2012 t'anks to t'e fortunate mi) of t'e long 'ot summer and growing 'ealt'

consciousness% 4'e increase was 'ig'er t'an in 2011 and uni>ue in itself since all

ot'er soft drinks categories declined in t'is eriod%

4'e growing trend is e)ected to continue in t'e forecast years% 4'e growt' of t'e

re$ious years was !ased mainly on negati$e or unimressiona!le effects suc' as t'e

weat'er or declining urc'asing ower due to t'e slow reco$ery of t'e .ungarian

economy 9leading to a trade down to more afforda!le soft drinks suc' as ackaged

water:% *t is imortant to note, 'owe$er, t'at t'e eriod of t'e e)tensi$e growt' 'ad

already ended !efore t'e economic crisis started 9from 1""" to 2006 t'e er caitaconsumtion triled:, t'erefore it is not realistic t'at t'e growt' rate can e$er reac'

dou!le-digit figures again%

.ealt' consciousness and c'anging consumer !eliefs regarding t'is will 'a$e an

insignificant effect on ackaged water in t'e immediate future, !ut t'e mo$ement is

resent and will start to grow in imortance during t'e second art of t'e forecast

eriod%

Bulk.D Water

Bulk.D water consumtion is declining in .ungary% 4'e categorys erformance is

strongly related to t'e erformance of t'e .ungarian !usiness sector, due to its rare

usage in t'e 'ome% &ince cost sa$ings were essential in sur$i$ing t'e economic

ro!lems for t'e maority of t'e !usinesses, t'is attitude will surely define t'e following

year also% 4'e declining trend is t'us e)ected to continue in 2013%

*n t'e long run, targeting 9and de$eloing: 'ome consumtion may ro$ide a firm !ase

to a sta!le and intense growt'% 4'e soradic signs of t'is strategy-s'ift are erceti!le

9in t'e case of /Lredi *on or &FentkirMlyi: !ut t'ese are not numerous and effecti$e

enoug' to transform consumer attitudes% 4'e oortunity to grow dynamically is real,

!ut re>uires in$estment, and is somet'ing t'at is e)ected will dri$e category growt'after 201 as t'e economic situation imro$es%

Car!onates

Car!onates declined in 2012 !y nearly #% 4'e increase of 2011 was not a sign of a

new trend !ut an e)cetion only% 4'e rate of t'e decline in 2012 was modest, 'owe$er

t'e differences in t'e erformance of t'e !ig !rand owners are 'uge 9and all of t'em

declined in terms of $olume:% 4'e reasons are numerousK t'e ersisting economic

crisis lessens t'e urc'asing ower, and it is still easier to su!stitute car!onates wit'

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ot'er roducts7 t'e ta)ation increased t'e rices directly7 t'e .ungarian economy 'as

not reco$ered% 4'e c'anges in consumer attitudes and t'e growing 'ealt'

consciousness 'ad a muc' smaller negati$e effect, !ut t'e t'reat is still resent%

W'ile t'e sta!le core-consumer !ase will kee t'e category from significant furt'er

decline, manufacturers are trying to increase consumtion !y adating roducts to

regulations and consumer trends 9for e)amle relacing sugar wit' ste$ia, suortinglow calorie roducts or increasing t'e uice content:% 4'erefore during t'e first art of

t'e forecast eriod stagnation or only a $ery slig't decline is e)ected% /rom 201+ a

reco$ery is due, in line wit' t'e anticiated reco$ery of t'e economy%

;uice

Desite a good erformance in H-12, t'e suffering and t'e dee decline continued

for t'e uice category in 2012% 4'e temorary increase at t'e end of 2012 stemmed

from t'e usual seasonal effect w'ic' was reinforced wit' almost e)treme romotional

offers 9t'e remium !rands offered a 30# rice reduction !efore and during t'eC'ristmas season:%

4'e ositi$e outlook of t'e final >uarter could not 'a$e !een more t'an a momentary

!li, 'owe$er% ;uice suffers from all t'e difficulties affecting t'e soft drinks market 9t'e

ersistent economic crisis and a decline in consumer urc'asing ower: !ut on to of

t'is t'e uice category 'as its own secial ro!lems% 4'ese include t'e increasing fruit

rices 9due to t'e 'ea$y frost in sring:, greater transortation costs, and increasing

imort rices 9as t'e .I/ e)c'ange rate is not fa$ora!le:% &ince t'ere are no signs of

a new 9roduct de$eloment, ackaging or communication: strategy t'at could foster

reco$ery, t'e only 'oe is t'at consumer attitudes will sta!iliFe, and consumtion will

resume as soon as it is a!le% Wit' t'is unlikely in 2013, t'e forecast is for continueddecline%

@rowt' is e)ected from 201% W'ile t'e category is not falling out of use, it is still

considered 'ealt'y% *t is not t'e oularity t'at is missing, !ut t'e !uying ower and

t'is s'ould soon imro$e as t'e economy starts to reco$er%

=ectars

negati$e erformance was recorded for t'e nectars category in 2012% 4'e final

>uarters erformance was ositi$e and !eyond e)ectations, 'owe$er t'is was notenoug' to eliminate t'e decline of t'e ot'er >uarters% &ince t'e good results are

coming from t'e erformance of t'e relati$ely low riced segments 9P8 and larger

acks: it is too early to cele!rate t'e !eginning of a re$ersed trend%

4'e continuation of t'e downward trend is e)ected in 2013 !ut t'e rate of t'e

decrease will !e smaller t'an in 2011 and 2012% 4'e !eginning of t'e uward trend

cannot !e earlier t'an 201, and rat'er deends on t'e general economic situation,

since nectars are not inno$ating% 4'e intermediate osition of nectars comrises a

serious t'reat, e$en if t'e economic conditions are fa$ora!le7 an intense economic

reco$ery and strengt'ening urc'asing ower can lead t'e new consumers of nectars

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!ack to uice% 4'ose w'o s'ifted from nectars to still drinks !ecause of t'e lower rices

are not likely to return, since t'e still drinks category is full of inno$ations w'ic' 'els

to maintain interest% 4'erefore in t'e medium term t'e realistic forecast is for only a

moderate increase%

&till Drinks

&till drinks suffered t'e !iggest dro in $olume of all t'e maor soft drinks categories in

2012% 4'e only ositi$e de$eloment for t'is category came from sales in t'e last

>uarter, w'ic' were 'ig'er t'an in t'e same >uarter in 2011% 4'is growt' was !ased

not only on romotions !ut also as a result of intense roduct de$eloment%

Desite t'e negati$e result in 2012, anot'er e)tensi$e fall is not e)ected for 2013

alt'oug' still drinks will continue to decline in 2013 t'ey will do so at a lower rate, due

to t'e continued negati$e economic situation and low consumer urc'asing ower%

/rom 201 a relati$ely 'ig' rate of increase will !egin% ll new inno$ations will matc'

wit' t'e more 'ealt' conscious attitude of consumers and new fla$ors will !eintroduced to widen t'e roduct range and 'el make t'is growt' firm% 4'is category

'as more of a romising future t'an ot'er categories w'ic' can only trust in t'e 'oe

of E!etter times%

&>uas'&yrus

&>uas'syrus are already on t'e rise, largely t'anks to t'e afforda!ility of t'e

roducts7 t'ere is no c'eaer alternati$e wit'in t'e soft drinks market% 4'e

moderniFation of t'e roduct range also 'eled to sur consumtion, wit' 'ealt'

conscious roducts aearing wit'in t'e !ig retailers and organic roducts !ecomingwidely a$aila!le in oen markets 9and additionally sometimes in 'yermarkets w'ere

an assortment is a$aila!le:% furt'er imortant factor is t'e oularity of t'e category7

s>uas'syrus 'a$e a tradition in .ungary t'at 'els to a$oid t'e Esimly t'e c'eaest

image%

moderate increase is e)ected during t'e forecast eriod, since t'e artly u to date

roduct range could !e enoug' to !ack u growt' e$en in t'e eriod of economic

reco$ery% 4'e relati$ely small market siFe and t'e resence of many small

manufacturers, 'owe$er, makes communication wit' t'e consumer difficult, t'erefore

raid growt' is not realistic%

/ruit Powders

4'e fruit owders market is doomed to stagnation% 4'e o$erall category siFe is small

9making any rele$ant marketing difficult to finance:, t'e most imortant !rands are

imorted 9lea$ing it rice-sensiti$e and $ulnera!le since t'e .I/ rate is $olatile:, and

worst of all, desite t'e negati$e economy, fruit owders are not t'e main su!stitutes

for soft drinks e$en among t'ose forced to find somet'ing less e)ensi$e%

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*n terms of future rosects, a furt'er 3# decline in 2013 is realistic since t'e

economic 'ards'is will not ease% 4'e category will t'en !riefly stagnate !efore

returning to growt' after 201+ in lig't of t'e e)ected economic reco$ery in .ungary%

4'ere is no category-secific reason for t'is increase, t'erefore t'e forecast growt' is

small at 1#%

*ced


45/113+

success% 4'ere was an increase on t'e remium end and also artly successful

acti$ities in t'e low riced 9!ut !randed: segments as well%

4'e forecast s'ows stagnation in t'e s'ort term as t'e economy is not e)ected to

reco$er in 2013, !ut it is not likely t'at t'e consumer !ase of t'is category will reduce

any furt'er% slow, !ut accelerating increase is anticiated in t'e medium term, since

t'e economic reco$ery will 'el to e)and t'e consumer !ase%

nergy Drinks

4'e imressi$e increase t'at c'aracteriFed t'e last decade lessened dramatically in

2012, wit' a decline o!ser$ed in t'e final >uarter% 4'e cause is well knownK t'e E'ealt'

ta) 9and its increase t'is year: ut an enormous !urden on roducers% *n t'e case of

t'e multinational !randed roducts t'ere is no ossi!ility of adating to it !y

reformulating roduct contents% 4'e rice sensiti$ity of consumers is also increasing,

making t'e osition of t'e imorted roducts e$en worse%

/urt'er strengt'ening of t'e Pri$ate 8a!el segment and local !rands is e)ected,

w'ile t'e suffering of t'e !ig !rands will surely ersist% 4'ere are signs t'at uite oular as a sweetener in coffee, !ut as instant coffee,

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3in1s and ods !ecame oular t'is way of consumtion 'as gradually disaeared:%

Condensed milk 'as !een on a long term declining trend and is forecast to decline

furt'er in t'e forecast eriod% =o sta!iliFation is realistically ossi!le, !ut t'e category

$olume is so small t'at t'is continually declining trend is difficult to reflect in t'e

$olume c'ange year on year%

4'e tiny e$aorated milk category, in contrast, will return to growt' in t'e medium termas a result of t'e gradual economic reco$ery in .ungary% 4'ere is no category-secific

reason for t'is, t'erefore t'e forecast growt' in terms of a $olume increase is small7

$olumes will not reac' t'e re-crisis le$el of 2006 until at least 2015%

.ot 4ea

*n terms of $olume, 'ot tea is sta!le% 4'e strong seasonality of consumtion is still

resent, wit' !rand owners focusing marketing acti$ity and new roduct launc'es on

t'e winter eriod% (eanw'ile t'e restructuring of t'e category is continuing7 t'e

roortion of fruit tea, green tea and fla$ored !lack tea is increasing% .er!al teas arealso growing stronger, w'ile t'e !lack tea segment is decreasing 9alt'oug' t'is

segment still 'as t'e largest s'are of t'e category:% ll roduct de$eloments are in

accordance wit' t'is trend 9a new fruit tea !rand, many new fla$or $ersions, and e$en

a tea wit' otential for additional cold !rewing 'as !een launc'ed:% W'ile new

roducts 'a$e 'eled to dri$e attention to t'e category, reduced consumer urc'asing

ower 'as forced consumers to turn to t'e more afforda!le roducts% 4'at, and a

erfect timing 9in terms of t'e economic situation: made Inile$ers new ine)ensi$e

!ut 'ig' >uality !rand &aga outstandingly successful in 2011 and 2012%

Desite t'eir success, t'ese new de$eloments cannot do more t'an sta!iliFe t'e

consumtion le$el% .ungary is not a tea drinking country, so t'e forecast is for a sta!le2013 and t'en a low growt' rate from 201 as t'e economic reco$ery !egins%

successful new roduct de$eloment w'ic' is a!le to transform seasonality could

c'ange t'is rediction, !ut t'ere are no signs of it yet%

.ot Coffee

Desite suffering from t'e economic crisis, increasing raw material rices and t'e

de$aluation'ectic e)c'ange rate of t'e .ungarian currency, consumtion le$els of 'ot

coffee declined only marginally%

Be'ind t'e sta!ility of t'e total market siFe, t'e structure of t'e consumtion is in

transition% 4'e use of ground coffee is declining7 w'ile traditional .ungarian ground

coffee !rands are strong and are fig'ting to maintain consumers, t'e remium !rands

are strengt'ening, !ot' in t'e fres' coffee !eans and in t'e coffee ods segments%

W'ile t'is strong olariFation is o!ser$a!le, t'e P8 segment is gaining more and more

oularity, e$en entering t'e coffee od segment as well% 4'e growing oularity of

instant, 2 in 1, and 3 in 1 roducts 9widely a$aila!le on t'e $alue end: is a longer

trend, and is still transforming consumer !e'a$ior%

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4'e transition and t'e sta!ility in $olume in t'is category could !e a firm !ase for an

increase in t'e medium term% 4'e forecast is for a sta!le market in terms of $olume,

wit' a smoot' growt' o$er t'e full forecast eriod%

Beer

Beer was a!le to continue its relati$ely >uick catc' u wit' t'e re$ious le$el of

consumtion, alt'oug' it is still far from t'e $olume eak reac'ed in 2006% 4'e

ersistent success of !eer-mi)es 9of w'ic' t'e non-alco'olic $ersions are clearly

c'allenging car!onates:, t'e new aearance of dark !rown !eer fruit uice mi)es

from .eineken, and t'e good weat'er 'a$e all layed an imortant role in t'e good

erformance o!ser$ed in 2012%

4'ere is a strong !ase for furt'er reco$ery% 4'e !eer market is dominated !y

multinational layers w'o are continuously inno$ating and communicating% 4'ese

multinationals 'a$e !roug't t'e culture of !eer drinking to t'e forefront of consumer

attention, !enefitting also t'e smaller !reweries and artisan roducts% 4'e maint'reats are t'e c'anging ta)ation 9t'e ta) !urden 'as !ecome 'ea$ier in 2013:, and

t'e furt'er weakening of consumer urc'asing ower% 4'e sum of all t'ese factors

s'ows a slower increase for t'e category in 2013, w'ic' will !e followed !y a

moderate, !ut sta!le growt' rate of around 2# o$er t'e rest of t'e forecast eriod%

Cider

Cider is a relati$ely new and remium riced category in .ungary wit' uncertain

rosects% $er t'e last few years, cider 'as !een an interesting no$elty and 'as

gained a relati$ely small grou of consumers% =ew !rand launc'es target t'is nic'eaudience !ut usually lack strong marketing suort% 4'e category cometes fiercely

for consumer attention wit' !eer, one of t'e most inno$ati$e categories in .ungary

today% (any of t'e new !eer roducts are c'eaer t'an cider and t'is is an imortant

factor in a market w'ere t'e urc'asing ower is low and declining%

Considering t'e introduction of .einekens &trong!ow @old late in 2012 and t'e !etter

distri!ution of &omers!y, cider can sa$e its osition and a slig't growt' is ossi!le in

2013 and in t'e following years% @rowt' is redicted to !e small 'owe$er7 w'ile initially

a no$elty, it seems risky to us' t'e category muc' furt'er in de$eloment% Cider is

not as c'ea as t'e maority of ot'er new roducts on t'e market and t'us 'as

remained a nic'e-roduct% (ore t'an one imortant !rand owner 'as alreadyintroduced cider into its ortfolio, so it is unlikely t'at a furt'er significant !rand will

enter t'e market soon% .owe$er, t'is forecast can !e su!ect to serious re$ision in

many cases 9deending on t'e inno$ations of t'e !eer market:7 t'e main oint is t'at

a su!stantial growt' is not realistic%

Wine

Wine is in a $enera!le osition% n t'e one 'and .ungary is trying to renew its wine

consumtion culture7 t'e go$ernment 'as sonsored camaigns to romote

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.ungarian wines, t'e sector is considered a art of t'e cultural 'eritage, and t'e

ta)ation olicy is cautious% n t'e ot'er 'and, t'e effects are >uestiona!le7 t'e

consumtion 9and t'e areciation: of 'ig' >uality wines is increasing, !ut t'e sector

as a w'ole 'as stagnated and t'e >uantity of arallel sales is enormous%

4'is year will surely !e toug'% 4'e $olume of domestic roduction was low in 2012 as

a result of t'e 'ea$y frost early in t'e year, w'ile t'e continuation of t'e economiccrisis will make it difficult for t'e maority of consumers to ay t'e 'ig'er rices% nly

t'e 'ig' >uality segment 'as an oortunity to grow furt'er7 all ot'ers will stagnate,

not only t'is year !ut t'roug'out t'e forecast eriod% su!stantial growt' would

re>uire a furt'er c'ange in consumer 'a!its, !ut wine is currently una!le to su!stitute

!eer in socialiFing, and all attemts to re$italiFe t'e once oular E&riFter culture

'a$e failed%

&irits

&irits continued to decline in 2012 wit' t'e negati$e effects of t'e economic crisis amaor dri$er% 4a)ation le$els in t'is category are 'ea$y 9and will !e e$en more so in

2013:, and since t'e law ermits 'ome distillation 9in smaller >uantities: t'e !lack

market flouris'es% EPalinka 9fruit !randy: is one of t'e only segments to !e erforming

well, and is oular again, e$en wit' t'e younger generation% s in t'e case of wine,

t'ere were go$ernment sonsored camaigns to suort t'is roduct%

&irits as a category suffers from its 'ig' rice, making it simly unafforda!le for many

consumers% 4'is suffering will !e intensified t'is year t'anks to t'e newly introduced

ta)es% *morted !rands will fair e$en worse, since t'e weaker local currency raises t'e

rices e$en furt'er% *n 2013 t'e downward trend will !e continued, w'ile in t'e medium

term a slig't reco$ery is ossi!le as t'e economic situation imro$es%

/ortified Wine

/ortified wine is not a $ery oular category in .ungary, alt'oug' some of t'e most

imortant international !rands are resent and t'ese !rands are widely known% 4'e

lack of a local tradition of consumtion makes t'e category less imortant%

/ortified wine suffers from all t'e negati$e effects on alco'olic drinks, !ot' directly

9ta)ation, weak local currency: and indirectly 9long lasting local economic crisis:% 4'e

forecast s'ows a furt'er decline in 2013, t'oug' t'ere is some correction anticiatedin 201%

/ortified wines are forecast to start reco$ery after 201, in line wit' t'e o$erall

economy% 4'ere is no category-secific reason for t'is, t'erefore t'e forecast growt' is

small%

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/Bs

/Bs 'a$e lost more t'an +0# in $olume comared to t'e eak ten years ago7 t'ese

relati$ely small and e)ensi$e imorted alco'olic drinks are continuing to decline%

&ince t'e financial en$ironment will not c'ange t'is year and t'ere is no 'oe of any

marketing suort, t'e trend will continue% 4'e forecast s'ows no turning oint, e$enin t'e medium termK t'e cometitors are numerous, and wit' t'e former oularity

faded away, t'e !est scenario is stagnation%

8at$ia

Packaged Water

W'ilst t'e summers of 2010 and 2011 were sunny and warm, 2012 'ad a tyical

8at$ian summer wit' only a few sunny and 'ot days% s demand for ackaged water is

t'e 'ig'est during t'e summer, unfa$ora!le weat'er conditions led to a decline of

around 3# in 2012%

s t'e category is already 'ig'ly cometiti$e, t'e entrance of t'e newcomer


50/113+0

Wit' de$eloment in >uick ser$ice restaurants and fast food outlets, it is forecast t'at

car!onates will grow in t'e coming year% long wit' t'e fact t'at cola fla$ored

car!onates will !e leading t'e market, car!onates are e)ected to 'a$e a steady and

imro$ing growt' in t'e long-term%

;uice

4'e category 'as reco$ered somew'at following t'e s'ar fall in $olumes seen in

2011, s'owing growt' of o$er 2# in 2012% =ew layers aeared in t'e market

ro$iding introductory rices for t'eir goods t'us 'eling to record a ositi$e outcome

for t'e category%

furt'er increase of 2# is forecast for 2013 in line wit' increasing consumer

urc'asing ower% 4'e main cometition is e)ected to !e in ackaging !etween t'e

current leader, cartons, and t'e newcomers N glass and lastic ackaging% 4'e

category is e)ected to kee steady $olumes wit' small $olume increases from 201

and onwards%

=ectars

lt'oug' 2011 was successful for t'e nectars category due to t'e 'ig' uice

concentrate rices and new roduct de$eloment, in 2012 $olumes were lost !ack to

t'e uice category%

.owe$er, wit' t'e imro$

global beverage forecasts march 2013-east europe

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