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LAST BRAND STANDING
Bottled Water in Rostov-on-Don

RUSSIAN BOTTLED WATER

With challenges of global crisis and its consequences for Russia investigations of food
markets gained higher importance as a kind of monitoring of brands’ changing market
positions1 – especially after price jump for the majority of foods registered in Russia in
September 2007. Income increase trend which has been mainly driving FMCG markets
through several recent years ceases to be so important. Income growth is hardly
anticipated in Russia in 2008 in the context of such consequences of global crisis as oil
price reduction, continuous decline of state budget surplus, dollar recovery and many
others. Yet it should be highlighted that consumer demand has certain inertia thus
after-effects of income growth trend will be observed on FMCG market for a while.
As soon as tap water and relatively inexpensive purification devices are available to the
great majority of Russians, bottled mineral/drinking water cannot be termed as an
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essential. Besides, market experts highlight direct relation of consumption volume of
the review product category to income level. On the other hand, bottled
mineral/drinking water is still essential for health-concerned or wellness-oriented
people. Key consumption motives/situations of the review product category are:
• thirst satisfaction – both spontaneous and when exercising2; juice and refreshing
drinks including carbonates are direct substitutes to water in this group;
• healing, treatment and disease prevention;
• substitution of tap water in cooking and making beverages – this consumption
motive is mainly topical for segment of 5 liter containers and cooler water in 19
liter bottles.
Under current economic conditions we can assume certain slow-down of consumption
volume with bottled mineral/drinking water. This process can be driven both by quit of
some consumers and reduced consumption frequency/volumes especially in high-price
categories. Some consumers can down-trade to inexpensive water – which is mainly
bottled by local manufacturers. Noteworthy, some consumers of direct substitutes of
water – juice and refreshing drinks – might switch to bottled mineral/drinking water as
a cheaper alternative.
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In 2007 bottled mineral/drinking water remained one of most vibrant and fast-growing
consumer markets in Russia. According to “Business Analytics”, mineral and drinking
water – segment of home and office coolers excluded – constitutes 40 to 60% of soft
drinks in volume. Annual growth of mineral water sales constitutes 10-15% to 15-25%,
according to different experts. Meanwhile most impressive dynamics in 2006-2007 was
demonstrated by water bottled into large-size containers – according to Discovery
Research Group, this segment grew almost by 40%.
According to “Business Analytics’” estimations, capacity of Russian market of bottled
mineral/drinking water in 2006 was about 297 million dal or $1.25 billion – with
segment of home and office coolers excluded. In 2007, according to Discovery Research
Group findings, size of the review market reached 340 million dal in volume and $1.5
billion in value. However, average per capita consumption rate in Russia is still
unimpressive by European standards3 – just about 20 liters according to “Business
Analytics”. Experts highlight that market is far from saturation and looks very
promising in terms of growth potential.
According to Rosstat, total output volume of bottled mineral/drinking water in Russia
constituted 288 million dal in 2006 – with segment of home and office coolers
excluded. In 2007 production increased by 20.7% and reached 348 million dal. Almost
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one third of this volume was provided in 2007 by South Federal District – 31.9%,
according to Discovery Research Group.
According to experts, in 2007 performance of Russian market of bottled
mineral/drinking water demonstrated such trends as import forcing out, high activity

1
Alliance Major is planning omnibus research “Brand Strength Through the Crisis”. Details are
available at alliancm@aaanet.ru
2
Another very popular purchase/consumption motive for bottled mineral/drinking water is for indoor
and outdoor parties and picnics; however this motive has no direct relation to health and wellness trend.
3
On mature markets of Eastern Europe – for instance, in Hungary, Czechia, and Poland – average per
capita consumption of mineral/drinking water accounts for about 45 liters annually; in Western Europe this
index constitutes about 100 liters while in some European countries – like Belgium, France, Italy, Germany,
and Spain – this index exceeds 100 liters.
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of regional manufacturers, increasing consolidation mainly driven by large international
companies with operators of adjacent markets involved, and also entrance of large
retail chains4. This year the said trends are maintained.

BOTTLED WATER IN ROSTOV-ON-DON

In August 2008 in the frames of independent research project “Rostov Consumers” the
company “Alliance Major” investigated consumer preferences on Rostov-on-Don market
of bottled mineral/drinking water. Data was collected by means of consumer poll and
purchase registry held during one day in supermarkets “Imperia Produktov (Food
Empire)”, “Magnet”5, “O’Key”, “Perekrestok (Crossroads)”, “Pyaterochka (Five)”,
“Solnechniy Krug (Sun Circle)”, “Tikhiy Don (Quiet Don)”, and “V Dvukh Shagakh (Next
Door)” 6. This review is based on purchase registry; it should be considered that the
review includes no information on retail audit and therefore gives no analysis of full
range of bottled mineral/drinking water offered by the said supermarkets. Here we
focus only on “active sales”, i.e. brands purchased at least once during the registry.
The registry includes purchases of 30 different brands of bottled mineral/drinking
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water made by 295 Rostovites. Brand preferences are given with no division by
manufacturers which should be considered for water bottled by more than one
company – for instance, “Essentuki”, “Iverskaya”, and “Slavyanovskaya”.

Table 1. Consumer Brand Preferences (share in purchases, %)

Share in
Brand Manufacturer
purchases
Aksinya Firma “Aqua-Don”, LLC 21.2%
Arkhyz Visma-Arkhyz, LLC 10.6%
Mercury Firma “Mercury”, LLC 10.6%
Aqua Minerale Pepsi International Bottlers, LLC 9.3%
Essentuki including 1. Universal Mineral Water Bottling Plant “Aqua- 8.9%
Essentuki #17 White”, LLC 3.4%
Essentuki#4 2. Wimm-Bill-Dann Foods, OJSC 3.0%
Essentuki 3. Kavkazskie Mineralnie Vody (Caucasus Mineral 1.7%
Waters), CJSC
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Essentuki #20 0.9%
BonAqua Coca-Cola ABC Eurasia, LLC 6.8%
Piligrim Firma “Mercury”, LLC 5.9%
1. Firma “Aqua-Don”, LLC
Iverskaya 4.2%
2. Kavkazskie Mineralnie Vody, CJSC
Lipetskij Buyvet Lebedyanskij, OJSC 3.4%
Goryachij Klyuch Bottling Plant “Goryacheklyuchevskoj” CJSC 3.0%
Aksu Aksu, OJSC 2.5%
Serebryanaya Ust-Bystra Aquadar, LLC 2.1%
Narzan Narzan, OJSC 1.7%
Novoterskaya Kavkazskie Mineralnie Vody, CJSC 1.7%
1. Mineralnie Vody Zheleznovodska, CJSC
Slavyanovskaya 1.3%
2. Elita Mineral, LLC
7
other 6.8%
TOTALS 100.0%

The highest popularity among consumers is enjoyed by local brand “Aksinya” (“Firma
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(Firm) “Aqua-Don” LLC, Rostov-on-Don) – 21.2% of all registered purchases. Second

line in this rating is shared by two brands bottled in Cherkessk, Karachaevo-
Cherkessiya: “Arkhyz” (“Visma-Arkhyz” LLC) and “Mercury” (“Firma (Firm) “Mercury”
LLC) – 10.6% of registered purchases each. Federal leaders “Aqua Minerale” (“Pepsi

4
According to “Business Analytics”, private label accounted for about 4% of the market of bottled
mineral/drinking water in the beginning of 2008.
5
“Magnet” chain is positioned as discounter chain; however recently observed price policy of the
company and offered product mix allow considering this chain as supermarkets.
6
Names are ranked alphabetically.
7
Alphabetically: Evian, Perrier, Vitalitos, Aquadar, Biba, Krystalnij Rodnik (Crystal Spring), Kubaj,
Legenda Kavkaza (Legend of the Caucasus), Ledyanaya Zhemchuzhina (Ice Perl), Nasha Marka (Our Brand),
Novoessentukskaya and Sophijskij Lednik (Sofia Glacier).
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International Bottlers” LLC) and “BonAqua” (“Coca-Cola ABC Eurasia” LLC) are far
behind the regional leader: aggregately they provided 16.1% of registered purchases.

Figure 1. Relation of Consumer Brand Preference to Purchase Place

(share of brand in all purchasers per store, %)
35% O'Key
Perekrestok
30%
Magnet
25%

20%

15%
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10%

5%

0%
Essentuki

Narzan

other
Goryachij
Arkhyz

Novoterskaya
Aksinya

BonAqua

Iverskaya
Minerale
Mercury

Serebryanaya
Klyuch

Ust-Bystra
Aqua

Consumer brand preferences have practically no relation to the place of purchase.

Significant deviations were observed only with “Essentuki” yet this was most probably
determined by different number of SKU in different supermarkets.
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Table 2. Preferences for Carbonated/Pure Varieties of Bottled Water
(share in purchases of the brand, %)8
Brand carbonated pure
Arkhyz 66.7% 33.3%
Aqua Minerale 71.4% 28.6%
BonAqua 68.8% 31.3%
Iverskaya 40.0% 60.0%
Lipetskij Buyvet 71.4% 28.6%
Novoterskaya 75.0% 25.0%
Serebryanaya Ust-Bystra 40.0% 60.0%
Totals 78.3% 21.7%

One fifth of water buyers preferred pure bottled water with the rest of purchases falling
on carbonated varieties. This ratio of pure vs carbonated water is not the same for all
popular brands – for instance, purchases of “Arkhyz”, “Aqua Minerale” and “BonAqua”
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show larger share of pure varieties in comparison to the average index. Among popular
brands of water “Arkhyz” is most often purchased in pure variety and in large
containers. The reason is that 5-liter bottles as a rule are chosen for household needs
like cooking; this size of containers provides about a quarter of pure water purchases.
General distribution of consumer preferences between pure and carbonated water is
first of all determined by this ratio with popular brands. Brand popularity in its turn is
mainly driven by price and retail coverage. For instance, “Aksinya” has wide retail
coverage and offers one of the lowest prices per liter on Rostov market of bottled
water. “Aksinya” is available only in carbonated variety; it might be that part of

8
Brands offered only pure or carbonated are excluded – like popular Aksinya or Mercury
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consumers would buy pure variety of this brand if it was available. However, in
qualitative researches of “Alliance Major” some consumers were saying that strong
carbonation of “Aksinya” is aimed to veil organoleptically perceived taste defects of
this water.
Standard 1.5 liter bottle remains most popular container size with 59.3% of all
registered purchases. This size of container is all-purpose and suitable for consumption
at home, in the office and on go. Other popular size providing 15.7% of purchases is
0.5-0.6 liter. This size of container is mainly chosen for outdoor consumption. It should
be mentioned that 0.5 and 0.6 liter bottles belong to the same segment of small-size
containers with Russian manufacturers preferring 0.5 liter and international – 0.6 liter
size. About 11.4% of registered purchases were provided by 1 liter bottles, and 7.2% –
by 5 liter containers. Noteworthy, popularity of this or that container size is determined
rather by offer – both of water bottlers and package manufacturers – than by consumer
preference.

Figure 2. Relation of Purchase Volume to Price per Liter

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(share in total purchase volume in liters, %)
18%

16%

14%

12%

10%

8%

6%

4%
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2%

0%
4 7 10 13 16 19 22 25 30 33 39 87

Price, RB/liter

Analysis of relation of purchase size – in liters – to price per liter again proved
importance of price as a purchase-influence factor for bottled mineral/drinking water.
About half of total purchase volume falls on bottled water sold for RB5-8 per liter, and
32.6% – on water priced RB9-13 per liter. Yet it should be considered that the most
capacious segment – RB5 to RB8 per liter – includes both low-priced carbonated
mineral water like “Aksinya” purchased mainly for thirst satisfaction and pure water in
large-size containers like “Arkhyz” or “Iverskaya” which is mainly bought to substitute
tap water in cooking. Different purchase motives imply different purchase sizes – the
latter motive requires large volumes of water thus driving sales in low-price segment.
It should be mentioned that high purchase volume rates – share in total purchase
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volume in liters – of such brands as “Iversakaya” and “Piligrim (Pilgrim)” were

provided by pure varieties of these brands bought in large-size containers of 5 and 19
liters; this boosted purchase volume rates of the said brands to 7.6 and 3.3 liters
respectively. High purchase volume rate of “Essentuki #4” was driven by one of
purchases – up to 4.7 liters.
Comparison of average prices and salability of different brands revealed that price was
not the only factor determining brand popularity. For instance, top-five brands include
brands of different price categories (by average price per liter9) – low-price
(“Aksinya”), standard (“BonAqua”, “Arkhyz”, “Mercury”), and high-price (“Aqua

9
Average price weighted by purchases – i.e. average brand price was calculated for all taste varieties
and package formats purchased during the registry.
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Minerale”). It would be logical to assume that retail coverage is very important for
brand popularity with reverse relation to price level: the lower the price the higher is
importance of retail coverage for brand sales. In low-price categories consumer loyalty
is not too strong – actually price-oriented buyers tend to choose whatever is available.
In high-price categories consumers are more loyal to brands. And, of course, in
segment of healing mineral water consumer loyalty is much stronger as compared to
mass segment.

Figure 3. Relation of Average Brand Prices (RB/liter) to Brand Salability

(share in total number of purchases and share in total purchase volume in liters, %)

180 25%
average price, RB/liter

160 share in purchase number

share in purchase volume
20%
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140
average price, RB/liter

120

salability, %
15%
100

80
10%
60

40
5%

20

0 0%
Kubaj
BonAqua

Biba
Essentuki #17

Essentuki #4

Aksu

Essentuki #20
Piligrim

Vitalitos
Zhemchuzhina

Aquadar
Aksinya

Krystalnij Rodnik
Narzan

Evean
Arkhyz
Mercury

Goryachij Klyuch

Perrier

Sophijskij Lednik
Aqua Minerale

Nasha Marka
Lipetskij Buyvet

Essentuki
Iverskaya

Novoterskaya

Legenda Kavkaza

Novoessentukskaya
Slavyanovskaya
Serebryanaya Ust-

Ledyanaya
Bystra
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Nina Krympenko
Alexandra Romashova

First published in Russian Food & Drinks Market magazine in November 2008

ALLIANCE MAJOR
market research company

Russia
Rostov-on-Don

www.allianc.ru
alliancm@aaanet.ru
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