US drinks maker Coca-Cola Co said it would invest $1.2 billion in Russia over the next 3 to 5 years as it bets sales of the carbonated drink will increase during the economic crisis.
“The company can afford to have aggressive positions in Russia,” Coca-Cola’s Russia, Ukraine and Belarussian head Zoran Vucinic told a news conference on Wednesday. “The market of non-alcoholic beverages is growing during (the) crisis and we want to continue investing in the Russian market.”
“The crisis will allow us to increase the range of products and sell coca-cola, energy drinks and (Russian beverage) kvas to a network comprising small kiosks and hypermarkets,” he said.
Russian vodka producers have said they believe they are poised for the biggest gains from the crisis as many Russians will switch back to cheap vodka after a few years of relative prosperity when they showed taste for wine and beer.
Coca-Cola has bigger international exposure than its rival PepsiCo Inc. Both have a large presence in Russia although PepsiCo has a stronger position in the juice segment through the country’s biggest juice producer Lebedyansky.
Juice is more expensive than carbonated drinks, and any advance on carbonated beverages could weaken the position of PepsiCo, which owns Russia’s biggest juice producer, in the soft drinks market.
Global demand for beverages and bottled water has suffered in the past months as consumers cut back in a contracting economy and retailers close shops. Many global retailers are now seeking ways to cope with problems in mature markets and are expanding to Eastern European countries.
Some cheap restaurant chains have shown strong resilience during the crisis, such as McDonald’s Corp which posted better-than-expected results as diners sought out lower-priced fare. (Reuters)