This year’s mineral water season may bring elevated prices

Last year mineral water sales were the only one to increase among high-volume non-alcoholic thirst quenchers: the category improved by nearly 5 percent, in a large part due to a low average price. In comparison with mineral water consumption in Western Europe, the annual 110 litre/person consumption in Hungary still leaves room for expansion.

According to Ferenc Kőhalmi, marketing director at Szentkirályi Ásványvíz Kft., data by Nielsen revealed that in 2009 the market of private label and B brand mineral waters in the lower price category grew by almost 3 percent in terms of volume. By this the category covered more than 60 percent of the market in total. To slow down the expansion of the low-price segment, brand manufacturers need to increase their marketing activities and innovate. What is more, a diversification process started among PL products, reveals Dr Nárcisz Csákabonyi, the managing director of Fonte Viva Kft.: – Some retailers have already started brand building with their quality ’private labels’ while distributing PL products only because of their low prices. In many cases, PL branded products are capable of competing with premium category brands.

Éda Pogány, Coca-Cola Hungary’s communications director told our magazine that mineral waters in the super premium category increased their market share by 37 percent, reaching a 2-percent volume share and a 5-percent value share of the market in total. This expansion was the result of lower prices and brand loyalty. Branded product volume sales were 4 percent lower last year, but Coca-Cola’s NaturAqua managed to grow by 10 percent in volume and by 15 in value sales. Aquarius-Aqua Kft.’s main profile is manufacturing private label mineral waters. Managing director Zoltán Fodor is of the opinion that last year proved good price/value ratio and good quality make PL mineral waters attractive to consumers, not to mention that for the average consumer mineral water is still just a thirst quenching liquid with neutral taste and nothing more.

Mr Fodor expects rather elevated prices for the season, as the price of PET granule soared by 30 percent on the world market and a further 20-percent price increase is forecasted until July. Since this material constitutes 40 percent of the costs of a bottle of water, 1.5-litre PL waters might cost HUF 59 in August-September, instead of today’s HUF 44. Magyarvíz Kft. is another key player in the PL mineral water segment. Commercial director Zoltán Balogh thinks that strong brands and quality cheap waters are in the best position at the moment. As for the internal structure of the market, the share of still waters continued to grow. However, carbonated mineral waters still represent 60 percent of the market in Hungary. Ferenc Kőhalmi called our attention to the fact that the ratio was 60:40 in the EU as well, but still waters have the 60 percent share.

At the same time, Szentkirályi and Emese still mineral water sales were bigger than sales of their carbonated versions. Health trends and wellness lifestyle both strengthen the prospects of still mineral waters. Mineral water sales are visibly shifting to modern retail channels. Éda Pogány opines that competition is the biggest in hypermarkets. The discount channel also strengthened, despite the exit of Plus their results did not turn negative in terms of volume sales, if compared with 2008. What kinds of innovations drive the mineral water market? Flavoured waters – for instance in May Coca-Cola will introduce two new NaturAqua Emotion flavours, Pear-Lemon balm and Josta. Another way forward is large packaging units, like Szentkirályi’s 5-litre product. The PET-PACK Group, with brands such as Balfi, Visegrádi or Pannon-Aqua, designs its own bottles and caps – says Mihály Szerencsi.

Dr Nárcisz Csákabonyi told our magazine that their Fonte Verde was moderately alkaline water, which perfectly suits present dietary trends. Péter Kanász spoke about Alpok-Aqua Kft.’s alkaline, low mineral content Alpok Aqua spring water, the communication of which focuses on its healthy character; they will even sponsor the Swimming European Championship in 2010. Hargita Gyöngye is a kosher mineral water imported from Transylvania. Its representative, Kinga Kovács says that consumers need to understand that not the most advertised products are the best – they will organise tasting sessions to popularise the product. Magyarvíz Kft. focuses on promoting PRIMAVERA this year, with a more exclusive design and a roadshow, in cooperation with Class FM radio.