Restaurateur Arkady Novikov received a stake in a company planning to launch cola-flavored drinks

The carbonated drinks market continues to attract investors after Coca-Cola and PepsiCo ceased production in Russia. The owner of the Novikov Group restaurant holding, Arkady Novikov, received a stake in a company planning to launch cola-flavored drinks under the Este.Co brand. The deficit in the category has been filled, and the opportunities for new brands are dwindling, experts point out.

Este Drinks Production LLC, co-owned through Este.Co International LLC by the owner of the Novikov Group restaurant holding Arkady Novikov, plans to launch a line of carbonated drinks. This follows from the data of the Federal Accreditation Agency and the Unified State Register of Legal Entities. “Este Drinks Production” is 80% owned by “Este.Co International”, where Mr. Novikov and Maximilian Besedin have 50% each. The remaining 20% ​​is owned by the general director of Este Drinks Production, Vadim Kupenko, through Bitubi Services LLC.

In mid-October, Este Drinks Production received a declaration of conformity for the production of Cola Classic Light, Cola Zero and Cola Zero Ultra drinks under the Este.Co brand. At the production address indicated in the declaration, the Undorovsky Volzhanka mineral water plant (Ulyanovsk region), which also produces lemonade and energy drinks, is located. And “Este.Co International” in July submitted an application to Rospatent to register the Este.Co logo for the class of soft drinks.

The Este.Co website states that sales of the drinks are planned to begin at the end of 2023 in cans and glass bottles of 0.33 liters, as well as plastic bottles of 0.5 liters and 1.5 liters. It says that the recipe is being developed in a laboratory at the NOI center in Italy and it is planned to open production facilities in Russia and the UAE. Este Drinks Production, Novikov Group and Volzhanka did not provide comments.

One of the founders of Famous Amazing Brands (Vanilla Flight and Anarchy brands), Anton Stelmakov, says that investments in launching a beverage brand depend on the number of positions in the line, circulation and packaging. According to him, the aluminum can is the most expensive format. And Volzhanka, continues Mr. Stelmakov, is unlikely to agree to contract production of small volumes.

Interest in launching new carbonated drink brands in Russia has surged following Coca-Cola’s decision to suspend operations in the country and PepsiCo’s discontinuation of Pepsi, Mirinda and 7Up. Multon Partners (formerly Coca-Cola HBC) now produces Dobry drinks, and PepsiCo produces Frustyle, Evervess and Russian Dar brands. NielsenIQ estimates the average number of cold beverage SKUs in retail chains to be 239 units in August 2023, up 8.4% from a year earlier. President of the Union of Juice, Water and Beverage Producers Maxim Novikov notes that investors see niches for new brands. But, he adds, difficulties will be created by a possible increase in environmental tax rates, exchange rate dynamics affecting the cost of ingredients and components for equipment, as well as export duties tied to the ruble exchange rate.

Anton Stelmakov notes that the lion’s share of emerging alternative brands of carbonated drinks is already disappearing from the shelves. The deficit was quickly filled, Dobry almost regained Coca-Cola’s position, and imports from neighboring countries are growing, he points out. According to the expert, of the local players, only GC Chernogolovka (Fantola) and MPBK Ochakovo (CoolCola, Street, Fancy) managed to gain a foothold in the category. According to NielsenIQ at the end of 2022, “Good Cola” with a distribution level of 90% occupied 17.7% of sales in the category in money, CoolCola – 5.4%, Frustyle – 2%.

According to Mr. Stelmakov, distribution in Novikov Group restaurants can support the launch of Este.Co, but 95% of category sales are provided by retail chains. RestCon CEO Elena Perepelitsa notes that the restaurant business is characterized by increased risks, and the production of food and beverages for retail can be a good diversification of investments. According to NielsenIQ, at the end of January-September 2023, sales of carbonated drinks grew by 5.5% in volume and by 10.2% in money year-on-year.

Anatoly Kostyrev