Investments in foreign spills – Newspaper Kommersant No. 200 (7401) dated 10/27/2022

Against the backdrop of a shortage of aluminum cans in the Russian Federation and the planned introduction of an excise tax on sweet drinks, large producers are looking for ways to enter foreign markets through contract bottling in other countries. Thus, the owner of the brands Tornado Energy and E-ON Global Functional Drinks can organize the release of products in Africa and the Middle East. Such projects can reduce logistics costs and the risk of damage to containers during transportation.

Major soft drink maker Global Functional Drinks (GFD) plans to arrange contract bottling in overseas markets. The corresponding vacancy appeared in the profile of the GFD distributor – GK SNS on the HeadHunter portal. The responsibilities of the candidate include drafting a task for the tender for the selection of a contractor for the production of beverages, interacting with the management team of the plant, monitoring the process, etc.

The GFD portfolio includes energy drinks Tornado Energy, E-ON, as well as Fresh Bar and Ilyinsky Lemonades. The group has sold more than 1.1 billion bottles since 2011, according to the SNA website. SNS is also considered the second tobacco distributor in the Russian Federation after Megapolis Group of Companies, it supplies a range of British American Tobacco (BAT; Dunhill, Kent, Vogue, Pall Mall, etc. cigarettes). Forbes estimated SNA revenue in 2021 at 164.6 billion rubles.

GFD told Kommersant that the decision to launch production in foreign markets could be made before the end of 2022. As noted in the company, the countries of Africa and the Middle East are considered among the possible locations. The MENA region (Middle East and North Africa) is one of the key regions for Russian food. As noted in the Agroexport center, the volume of consumption of finished products in the target countries of Africa exceeds $29 billion a year, and soft drinks are one of the most popular categories. For the Russian market, GFD is currently building a plant in the Voronezh region with a capacity of 800 million units per year and a cost of almost 5 billion rubles.

One of the founders of Famous Amazing Brands (Vanilla Flight and Anarchy drinks) Anton Stelmakov notes that GFD has always had ambitions of a global player and previously the company had an office in the USA. Spilling drinks abroad will save on logistics, which can be very costly in the category, optimize production against the background of a possible introduction of an excise tax on sugary drinks in Russia, and also avoid a shortage of aluminum cans in the country, he lists. As the expert notes, there are enterprises in other countries that need more workload, and the achievement of agreements will largely depend on the conditions offered by GFD.

Maxim Novikov, President of the Union of Juice, Water and Drink Producers (Soyuznapitki), recalls that Baltika first supplied energy drinks from the Russian Federation to Uzbekistan, and then organized a joint bottling with a local enterprise in the country. According to him, in addition to saving on logistics, such projects allow leveling the risks of damage to containers during transportation. In Russia, meanwhile, the demand for carbonated drinks is declining. According to NielsenIQ, category sales over the past six months have decreased by 7.4% in volume, while in money terms they have grown by 15.8% year-on-year.

Against the background of the adoption by the State Duma in the first reading of the bill, which introduces an excise tax of 7 rubles from 2023. per liter of drinks with a sugar content of more than 5 g per 100 ml, a number of major players have already announced the suspension of new investments. Among them are Chernogolovka Group of Companies (Fantola, Turbo Energy, Baikal, etc.) and MPBK Ochakovo (CoolCola, Fancy, Street, etc.). Chernogolovka told Kommersant that they plan to expand production at a beverage factory bought in Uzbekistan in May. According to Mr. Novikov, the introduction of an excise tax on drinks with sugar can lead to an increase in production in neighboring countries, such as Armenia, Kazakhstan and Belarus.

Anatoly Kostyrev