Sector Study: Refreshments
A stabilizing trend in 2017, following a decline in previous years
The domestic sector of refreshment manufacturing is examined in a recent study of Infobank Hellastat S.A. According to Alexis Nikolaidis, Economic Research & Sectorial Studies Senior Analyst, in 2017 – following a decline in previous years – a trend towards normalization dominated the market, which is linked both to the reopening of the network of Marinopoulos after its acquisition by Sklavenitis, and the further increase of tourist traffic. In detail, according to a survey conducted by Nielsen, from the beginning of the year to mid-July, the turnover of the market dropped by 0.5% per annum, while the corresponding volume recorded a marginal rise of 0.3%.
Overall, a shift in consumer tastes is noticed towards healthier products, such as light refreshments with lower sugar content (or no sugar at all), product codes based on mountain tea, antioxidants, etc. On the contrary, the consumption of carbonated products and refreshments with high sugar content that have been marketed for several years, has been limited gradually.
Over the last years, the biggest losses are identified in private-label products, which is associated, on the one hand, with the aggressive trade policy implemented by companies that manufacture branded product codes – and as a result, the deviation of prices from unbranded products is reduced – and on the other hand, the operation of the stores of Marinopoulos under capacity.Over the last years, the sector has been characterized by the development of domestic companies, which – notwithstanding the overall decline of the market – have investment in the development of “green”, innovative products, corresponding to consumer tastes for healthier refreshments, while, at the same time, they boost their outward-looking approach and presence abroad. On the contrary, a decline in the market shares of the two multinational manufacturers, i.e. Coca-Cola and PepsiCo, is noticed, with the former still holding the first place, although it has suffered losses, while the latter has retreated to the third place. Currently, the two companies cumulatively hold a market share of approximately 70%-75%, versus 85% before the occurrence of the recession.
According to Mr. Nicolas Gouzelos, CEO of Infobank Hellastat, “The Greek companies, taking advantage of the tendency of several consumers to adopt healthy nutrition patterns, implement investments in the development of innovative products of high added value at affordable prices, promoting quality domestic production. In this context, a positive outlook can be identified in the category of refreshments with stevia, as it also indicated by the recent entry of new major competitors. Therefore, in the near future, the market is expected to demonstrate a much higher growth, which will also favor the broader sector of non-alcoholic beverages.”
In the study of ΙΒ.HS, the financial statements of 12 companies are analyzed. The key conclusions can be summarized as follows:
- In 2016, Turnover stabilized at €523m, showing a marginal rise of 0.3%.
- Total EBITDA increased by 38%, at €12.8m, while pre-tax losses were reduced to €9m, from €12.3m in 2015.
- The EBITDA margin rose to 6.2%, while the EBT margin dropped slightly to 1.4%.
- Capital leverage rose to 0.7 over 1, remaining low.
- Receivables were collected within a period of 4 months.