November 21, 2019, 01:04 / Business Exclusively by subscription

Coca-Cola launched energy drink production in Russia

Sales of these drinks are growing at a faster pace Ekaterina Burlakova Coca Cola

Coca-Cola has begun production of the energy drink Coca-Cola Energy in Russia, a company representative told Vedomosti. It contains caffeine, guarana extract and B vitamins, but no taurine.

American Coca-Cola is the world's largest producer of soft drinks with revenue of $31.9 billion in 2018, but until recently it did not have its own energy drink - it began production only in April 2019 and already sells it in 25 countries.

The company plans to sell the new drink throughout Russia and has already agreed on the supply of the drink with key retail chains, a Coca-Cola representative said. This is confirmed by representatives of Lenta and Perekrestok. The largest retailer in Eastern Siberia, Komandor, is negotiating supplies, its representative said.

Sales of energy drinks in Russia are growing at a high rate, outpacing the soft drink market as a whole, a company representative explains the decision to launch the project. This is confirmed by Nielsen data: in September 2018 – August 2019, sales of energy drinks in liters increased by 28.8%, while the entire beverage market is stagnating. Energy drinks are one of the fastest growing categories in sales of not only soft drinks, but also all food products, notes Olga Dashkevich, director of customer relations at Nielsen Russia.

This relatively new category of drinks for Russia is becoming increasingly popular, says Maxim Novikov, president of the Union of Soft Drinks and Mineral Water Producers: manufacturers are actively experimenting and releasing new products, attracting consumers. These drinks are mainly purchased by students, office workers and people working at night. In addition, more and more of these products are sold through promotions: over two years, the share of promotional sales increased by 10 percentage points to 62% in physical terms, says Dashkevich.

This is also one of the highest-margin categories - the price of energy drinks is often higher than other drinks, notes a Baltika representative. According to Nielsen, the average retail price of 1 liter of carbonated drinks is 48.5 rubles, energy drinks are 148.7 rubles. This market is led by Adrenaline Rush (PepsiCo) with a share of 28.6%, Red Bull - 13.5% and Flash Up (Baltika) - 11.4%, according to Euromonitor International.

At retail, Coca-Cola Energy will cost an average of 90 rubles. for 250 ml, a company representative said. This is quite expensive, says a Baltika representative: the company sells its Flash Up for 55 rubles. per jar 0.25 l and 53 rubles. per plastic bottle 0.5 l. But Adrenaline Rush and Red Bull cost about 90 rubles, according to data from online retailer sites. A PepsiCo spokesman would not comment on competitors' plans. The company itself is also expanding its range and this year launched a new brand of tonic drink – Nature Rush.

The production of Coca-Cola Energy was launched at the plant of its bottler - Coca-Cola HBC in the Rostov region on existing lines, say representatives of Coca-Cola and the bottler. This is one of the company's largest factories, where carbonated drinks, water and juices are produced. Coca-Cola HBC is already collaborating with a major energy drink manufacturer, Monster Beverage Corporation (Black Monster and Burn brands), organizing the bottling and distribution of its drinks.

The company representative does not name the planned production volume of Coca-Cola Energy and investments in it. To create a major player, it is necessary to produce several million liters per year, Novikov estimates. If we are talking about production on existing lines, then the costs will be mainly in promotion, notes a person close to one of the beverage manufacturers.

Investments in promotion at the launch stage can amount to up to 500 million rubles; in addition to traditional advertising, this also includes promotion on social networks and points of sale, promotions, estimates the director of the Depot branding agency Alexey Andreev. In his opinion, the flagship brand in the name will avoid aggressive promotion, since it is already familiar to consumers.