Bubbling Up

How would you define beverage-drinking habits in Kazakhstan?

The beverage market in Kazakhstan has developed in much the same way as the beverage markets in Russia, Turkey, Ukraine, and the EU countries. The average Kazakhstani consumer spends a large part of his or her income—about 43%, and one of the highest rates in the world—on food and beverages. Approximately 40% of beverages consumed in Kazakhstan are teas. Water consumption is also fairly high, and the juice segment is very developed. The sparkling beverage sector, however, remains rather underdeveloped as far as per capita consumption when compared to other countries with similar economies.

What are the challenges in creating room for the sparkling beverage industry and what strategies are you exploring?

The strength of the still beverages sector and strong cultural trends are significant challenges in creating room for sparkling beverages, but we view these as areas of opportunity. For example, Kazakhstani consumers enjoy traditional flavors, and based on this knowledge we successfully launched Fanta Dushes and Fanta Buratino in 2010, as well as introduced Fanta Lemonade and Coca-Cola Zero in 2011. The extension of these Fanta brands in Kazakhstan contributed largely to our double-digit volume growth in the sparkling beverages category. So that we remain in a position to take advantage of such growth opportunities in the sparkling beverages sector, we place great emphasis on understanding and monitoring consumer behavior. We closely monitor consumer demand, preferences, and trends. We manage our product portfolio by adding new flavors, brands, and packaging, and we continue to focus on effective marketing strategies such as our recent “Coke’n Meal” campaign in order to attract new consumers.

Against the backdrop of this information, how has Coca-Cola’s position evolved since entering the Kazakhstani market?

We have been in the market since 1996 and have just celebrated our 15th year here. We have invested so much because the local economy has grown. We started out by importing, but now we operate the largest plant in Central Asia. Our operating systems are technologically advanced, and we produce nearly every kind of packaging imaginable, including canned and carton products. In 2012 we are investing in a glass bottling line, and this summer we will start selling original glass bottles to consumers. We directly employ more than 700 employees in Kazakhstan, but indirectly our employment footprint is significantly larger.

How does Kazakhstan compare to other countries in the region in terms of per capita consumption?

In terms of per capita consumption, we are benchmarked alongside both Russia and Turkey, but are considered more closely aligned with Russia, with which we share a very similar consumption culture. We are the biggest market among the Central Asian countries. Total consumption is set at 74 servings of 250 ml per person per year.

What does the country’s small population imply in terms of Coca-Cola’s future?

We enjoy favorable demographics in Kazakhstan. For example, 50% of the population is below the age of 30, and this is a very valuable market for FMCG producers. I believe growth will continue in our business and in our industry because this young population is willing to spend a higher income percentage on food and drink.

What are some particular specialties that have caught your attention in Kazakhstan?

One noteworthy aspect is that Kazakhstan is largely a cash-based society. When I first came here, I saw many cash machines, and therefore presumed credit card transactions would be popular in Kazakhstan as they are in Turkey. But there is little evidence of credit card transactions. Even in supermarkets, Kazakhstani customers make cash withdrawals and then carry out cash transactions.

What is Coca-Cola’s plan for the future in Kazakhstan?

We recently launched our company’s 2020 Vision and Strategic Framework and we defined the roadmap for the next 10 years, outlining the extraordinary growth opportunities that lie ahead. We believe that the young population in Kazakhstan, combined with trends such as urbanization, an emerging middle-class, and global connectivity, will present tremendous growth opportunities for us during our journey toward 2020. Last year, the beverages market grew 17%, but we grew 25%. In line with our 2020 Vision, we expect our volume to continue along a double-digit growth trend.