Fruit/vegetable Juice in Azerbaijan

Fruit/vegetable Juice in Azerbaijan

 

 

Fruit/vegetable Juice

Headlines

·         In 2008, sales increase by 48% in total current value terms and 5% in total volume terms, to reach AZN44 million and 15 million litres

·         The key trends in 2008 are company consolidation, and the launch of the Jale brand and new brands of pomegranate nectars

·         In 2008, unfrozen nectars registers the highest total current value growth of 51%, while reconstituted 100% juice records the highest total volume growth of 5%

·         Retail value growth is much faster than retail volume growth in 2008, due to substantial unit price increases

·         In off-trade volume terms, Qabala Meyva Emali Muessisasi is the leading player with a 23% share in 2008

·         Over the forecast period, sales are expected to grow by a 3% total volume CAGR and an 8% total constant value CAGR

Trends

·         One of the important trends is the substantial price increase of imported brands, which created favourable conditions for the entry of the domestic Jale brand by Qabala Meyva Emali Muessisasi. Jale offered high-quality products at the lowest prices. According to the Centre of Economical Research at the Ministry of Economical Development, the prices of fruit/vegetable juice products in Ukraine, Turkey and Russia were maintained by manufacturers, however, their prices increased substantially when imported.

·         Total volume sales grew more slowly in 2008, compared to the review period CAGR, due to the substantial unit price increases for both imported and local products. The cheapest brand was Jale, which penetrated almost all categories. The price environment encouraged two big local brands, SAF and Sonti, to merge and create a new enterprise, Azeri Fruit Co. This new company launched a new brand, Azeri Fruit and plans to penetrate international markets.

·         Towards the end of the review period, fruit/vegetable juice experienced consolidation among the leading competitors. Some small enterprises offering innovative pomegranate nectars entered unfrozen nectars. The companies addressed “what the consumer needs” issues in terms of health benefits, as pomegranate juice helps blood circulation. Structurally and financially strong competitors managed to force out weaker smaller brands, such as Swell, Meysu, Bravo, Aroma, and 1001 Dad, thereby leading to a consolidated range of brands. The new Jale brand launched products in glass bottles, and tetra prisma, and brick-shaped liquid cartons within a short period of time. It is the cheapest brand offering high quality products without preservatives and it benefited from heavy investment in advertising campaigns through TV, street billboards and in-store posters.

·         In 2008, off-trade sales grew by 5% in volume terms, to account for a 72% share of total volume sales. Premium brands such as Cappy, the not from concentrate 100% juice brand, Pfanner, Dr Witt, and Ocean Spray Cranberry appeared in the off-trade channel. All existing liquid carton formats were present, including gable-top, tetra prisma, and brick-shaped liquid cartons. These factors also stimulated strong sales growth in 2008.

·         In 2008, on-trade sales of fruit/vegetable juice grew by only 3% in volume terms, accounting for over four million litres. Slower on-trade volume growth, compared to the review period CAGR, was largely due to the unit price increases observed in all categories. Although, the growth of foodservice types such as pubs, bars, restaurants, wedding houses, cafés, and fast food service restaurants is fat in Azerbaijan, the rising price of fruit/vegetable juice in the off-trade channel also affected on-trade sales. Carbonates tend to be preferred by customers in on-trade outlets.

·         Fruit/vegetable juice is available as fountain sales in Azerbaijan, mainly since 1999 with McDonald’s penetration. Fountain on-trade volume sales of fruit/vegetable juice grew by 121% over the review period to reach 400,000 litres in 2008. The expansion and popularity of fast food establishments, mainly McDonald’s, significantly boosted the penetration and appeal of fountain sales of fruit/vegetable juice.

·         Fruit/vegetable juice continued to record healthy growth rates in 2008, with sales increasing by 5% in total volume terms and 48% in total current value terms. However, volume growth was slower compared to the review period as a whole, largely due to increased customs duties for importers and consequently higher unit prices. This created favourable conditions for the local Jale brand, which appeared in 2007.

·         The main consumers of fruit/vegetable juice in Azerbaijan live in urban areas. These products tend to be consumed with family and friends during social events such as birthdays. Although consumers are increasingly aware of branding, price is a key factor in the purchasing decision. In terms of the rural population, it is traditional to prepare stewed fruits (compotes) from fresh fruits and chill them in the freezer, especially during the summer, or to prepare the traditional drink sherbet, which is also consumed chilled. Rural consumers perceive that manufactured brands contain additives, even when the packaging promotes 100% fruit content.

·         Unpackaged freshly squeezed juice is available in Azerbaijan, however only in the on-trade channel. It is prepared to order and is never packed. Otherwise, there is no penetration of unpackaged fruit/vegetable juice in the off-trade channel.

·         The consumption of fruit/vegetable juice in Azerbaijan is not especially seasonal. During summer, they are consumed chilled at home and on the go, or purchased chilled from the fridges of street vendors, mainly in small 250ml liquid cartons. However, these products are purchased less for at-home consumption during the winter. In the on-trade channel, during both summer and winter, wedding houses offer fruit/vegetable juice alongside carbonates and bottled water on special occasions such as weddings, parties, birthdays, holidays, etc. In general, fruit/vegetable juice is consumed throughout the year.

Competitive Landscape

·         In retail volume terms, Qabala Meyva Emali Muessisasi was the leading player with a 23% share in 2008. In terms of brands. At the end of the review period, Qabala Meyva Emali Muessisasi heavily invested in advertising its main brand. Within a short period of time, Jale became highly recognised among consumers. The brand, which has emerged as the cheapest option, offers a high quality variety of fruit and berry flavours, such as strawberry, quince, plum, grape, pomegranate, feijoa, orange, peach, apricot, pineapple, mixed fruits, cherry, and apple without preservatives.

·         Qabala Meyva Emali Muessisasi registered the biggest off-trade volume sales growth of 127%. The largest decrease in off-trade volume sales in 2008 was experienced by Sabirabad Konserv ATSC, which was mainly distributed in the provinces.

·         In 2007, the sales of international brands outperformed those of domestic brands, largely due to the advances made by Ukrainian and Turkish companies offering cheaper prices. However, the performance of domestic brands was revived in 2008. This development is attributed, mainly, to the substantial price increase for imported products. The emergence of Jale brand as a high-quality brand, at the lowest price and heavily supported by advertising boosted the overall share of domestic players. However, price increases also affected local brands, though they suffered less in this respect than imported brands. Thus, local brands experienced a resurgence due to sound positioning strategies across price segments.

·         The most notable new product launch in 2007-2008 was Jale. New premium products also appeared in 2008, for example Dr Witt (Agros Nova Sp zoo), Cappy (The Coca-Cola Co) and Ocean Spray Cranberry (Ocean Spray Cranberries Inc). The not from concentrate 100% juice category was opened by the Pfanner brand, however, it did not enjoy wide consumption, since the price for a 1-litre carton cost AZN7.05, which is expensive for the majority of consumers. Additionally, the small local Dadmali brand by Haci Jamalkhan Kendli Fermer Teserrufati and AzNar by AzNar ASC entered unfrozen nectars and were positioned as natural pomegranate juice products. AzNar also expanded into table sauces, with traditional pomegranate sauce. By the end of the review period, birch tree flavoured juice was creating interest and Savushkin Produkt JSC, which is well known as a dairy products player, introduced birch juice under the Na100yashiy berezoviy sok brand in 2008.

·         In 2008, the key advertising campaign featured Jale brand, which was supported by advertisements on TV and street billboards and via in-store posters. Qabala Meyva Emali Muessisasi invested heavily in nationwide advertising initiatives for Jale. Jale is manufactured far away from Baku in the rural Qabala district, however the brand is promoted in big key cities, including Baku. In Azerbaijan, consumers also tend to recommend to family and friends which juice they consider the best option in terms of quality and price. Sonti Mix introduced and promoted polyethylene packaging through retailers. Meanwhile, in August 2008, Cappy was advertised on one of the local private TV channels.

·         In packaging, there is strong competition between glass bottles and liquid cartons. Liquid carton packaging continued to dominate in fruit/vegetable juice in Azerbaijan in 2008. Perhaps the main advantage of liquid cartons over glass bottles is that glass-packed fruit/vegetable juice is more expensive. Nonetheless, local manufacturers continue to launch their products in glass bottles, as this pack type allows transparency and products a longer shelf life. of up to three years.

·         Nidan OOO (Da!, Moya Semya brands)and Sandora TOV (Sadochok, Sandora brands) introduced its products in 2-litre brick-shaped liquid cartons, alongside existing 1-litre versions. At the end of the review period, the most notable advance was represented by PET packaging, which was novel in the context of Azerbaijan. The domestic manufacturer, Aysu Gida Senaye Ltd MMC, introduced a new product, under the Aysu Paradise Nektar brand, in plastic bottles. This could lead to a new trend, as more consumers will appreciate the convenience offered by this new pack type, especially in terms of on-the-go consumption.

·         Substantial unit price increases for fruit/vegetable juice at the end of the review period affected all price segments. All imported fruit/vegetable juice from Russia, Ukraine, Turkey, and Belarus became premium offerings. Jale was positioned as a high-quality, economy brand. Local brands such as SAF and Sonti, which were previously positioned as economy brands, became standard brands in 2008. Expensive fruit/vegetable juice products are mostly distributed through supermarkets. Standard and economy brands are available through all existing retail outlets, whereas premium brands tend to be distributed through supermarkets and large independent retailers.

Prospects

·         The demand for fruit/vegetable juice enriched with vitamins, without any preservatives or chemical additives is growing. Products claiming health benefits, for instance pomegranate juice, which aids blood circulation, and new flavours flavour combinations and mixes are all expected to perform well over the forecast period. However, these products are likely to carry higher prices, and price will remain a key factor in the purchasing decision of consumers in Azerbaijan.

·         The predicted forecast performance was not altered in 2008. Fruit/vegetable juice is expected to generate healthy growth while the competition between local brands and Ukrainian, Russian and Turkish brands will intensify. Consumers are also expected to become more sophisticated in terms of their choice of brand, and their awareness of product quality and packaging design.

·         Compared to the review period, total volume growth is expected to experience a slowdown, largely due to the sustained high prices for fruit/vegetable juice. It is predicted that once Jale has repaid its investment, the brand will be positioned in the mid-priced segment, creating space for new economy brands and products.

·         While the price of fruit/vegetable juice tends to be expensive for the majority of consumers, there are no major threats to forecast growth. The key challenge for manufacturers is to develop and promote the health benefits of fruit/vegetable juice, including its mineral and vitamin content.

·         The penetration of new, cheaper products from Turkey, Russia and Ukraine in 2008-2010 is expected to limit unit price increases over the forecast period. The merger of the SAF and Sonti brands will lead to the launch of a new brand, which might help to stabilise unit price increases.

·         The new product launches and innovations in 2007-2008 are expected to gain strong consumer interest and demand in the short term. In response, other manufacturers might invest in advertising support, the expansion of product assortments and distribution networks. Premium brands (Cappy, Dr Witt, Ocean Spray Cranberry) are predicted to stimulate low demand among the majority of the population, as price will remain a key factor in the consumer purchasing decision, despite the positive economic developments in the country such as rising disposable income.

·         Chilled vs ambient juices is not expected to experience much change in terms of shares over the forecast period. Ambient juice is expected to continue its overwhelming domination of off-trade volume sales. However, the proportion of retail outlets which display fruit/vegetable juice in chilled compartments is expected to increase. Chilled juice is distributed by supermarkets and larger independent food stores. Street vendors also sell chilled juice stored in coolers during the summer.

·         There is no company activity expected in fruit/vegetable juice over the forecast period.