Search Results for: South Africa

BY MONICA DOBIE
A NEW genetic test that can detect devastating clam disease QPX has been developed by American scientists at the Woods Hole Oceanographic Institution (WHOI), in Cape Cod Massachusetts. They claim the test is sensitive enough to detect the QPX organism not only in clams, but also in seawater and sediment.…

BY RAGHAVENDRA VERMA, in New Delhi

INDIA’S opening-up as a free market economy, along with the adoption of new technology, reformed laws, and the presence of vigilant media are curbing many commercial crimes in the world’s largest democracy, but criminals still find ways to make a dishonest Rupee.…

BY RAGHAVENDRA VERMA, in New Delhi

INDIA’S opening-up as a free market economy, along with the adoption of new technology, reformed laws, and the presence of vigilant media are curbing many commercial crimes in the world’s largest democracy, but criminals still find ways to make a dishonest Rupee.…

BY MARK ROWE AND PAUL COCHRANE
INTRODUCTION

JUST as chocolate sells well in cold countries, so do soft drinks flourish in hot countries, which would suggest that North Africa and the Levant presents an inviting face to the international drinks market.

And, broadly speaking, this is the case. Most international brands, such as Coca Cola, consider Tunisia, Egypt, and Morocco among their top 10 fastest growing drinks markets in Africa, with these countries enjoying high growth rates of sales in the past few years, frequently of more than 40%. The region has seen a small rise in affluence in some countries, which creates opportunities for companies to sell greater volumes of premium brands. Meanwhile, prices of soft drinks are low and tend to be within the remit of all social categories.

At an international level, the European Union (EU) is busy striking free trade deals with its African and Levant neighbours on the Mediterranean coast, and the EU's drinks industry is taking note. High tariffs on imported food and drinks have protected local companies but these are being reduced by 25% each year and will have evaporated by 2012.

The main areas for growth are in mineral water and fruit juices. "Safe" water is popular in Egypt, for example, which has one of the highest kidney failure rates in the world, mainly because of the lack of a reliable source of clean drinkable water.

The North Africa region tends to be dominated by local players but is a growing market for the international brands. Nestle Waters saw 2.5% of its global sales in the region in 2004, worth around Euro 130 million. Nestlé Waters, which, with a 9.8% market share, is the market leader for bottled water in the Africa/Middle East region, with its Baraka and Nestlé Pure Life brands, earlier this year announced a major deal to take over BGFZ, Algeria's major producer of bottled water and carbonated drinks, and swiftly moved to complete the take over.

Yet many challenges remain, as a spokeswoman for Nestle Waters pointed out. "The main challenges are the growth potential of the bottled water market," she said. "This depends on the dynamism of the economic environment and the distribution network that needs to be better structured."

Per capita incomes, though higher than in much of the rest of Africa are still extremely low compared to western standards. In addition, international companies - speaking on background terms to just-drinks.com - are only too aware that they must take into consideration the political climate: many international firms privately acknowledge that in each country there remains a wariness of Western influence.

Yet a long-term boycott related to the war in Iraq failed to materialise. "The boycott didn't happen," said Said Benbihi, North Africa research analyst for Euromonitor. "There were attempts by local players such as Mecca Cola and Arab Cola to seize the opportunity but they only succeeded temporarily. People found these brands just weren't as good as the established brands. The big brands such as Coca-Cola are well established and have sophisticated distribution systems."

The issue of investment risk is never far away. While most countries in the region are politically stable, they can scarcely be said to have whole-heartedly embraced democracy. In Libya, Col Muammar Gadaffi appears to have come in from the cold, but a track record of eccentric behaviour means that drinks companies will remain cautious in Libya for some time yet. Algeria has suffered from an appallingly cruel internal war for more than a decade, though here at least some degree of peace has recently been secured.

Nevertheless, the broader canvas for the region looks rosy. "The region has really great potential," said Mr Benbihi. "These countries are generally non-alcoholic so the main market is for soft drinks and the market is far from saturated."

Egypt

With a population in excess of 70 million (the fastest-growing and the largest in the Arab world), the Egyptians represent one of the most important soft drink markets in the Middle East. According to Euromonitor, soft drinks saw a 48.1% growth between 1997 and 2004, with carbonates, the largest sector, growing by 35.2% and bottled water by 88.3%.

Recent years, however, have seen a major slowdown in the Egyptian economy in real terms, which has negatively affected sales of soft drinks. Carbonates, fruit juice and concentrates have reported volume growth well below historical averages since 2003. This was mainly attributed to the general decline in disposable incomes among the Egyptian middle-income groups, the main consumers of soft drinks. External factors, such as currency fluctuations and devaluations, have led to a rise in unit prices for imported items such as fruit pulp, packaging materials, machinery and even advertising.

The major players in the country include Al Ahram, the leading producer of beverages - alcoholic and nonalcoholic - with a market share in excess of 90% in both segments. By November 2005 Al Ahram had seen a five-fold increase in volumes, and a 10-fold increase in capitalisation in its business since privatisation in 1997. The company recently built a new distillery - the first in Egypt - to address unsatisfied demand caused by high import tariffs on alcohol.

According to Euromonitor, in 2003, the year for which figures are most recently available, carbonates seemed to be recovering slightly with positive growth in sales, at 3.7%, compared with nearly 1% in 2002.

Bottled water is perceived to have plenty of potential in Egypt. Most Egyptians believe tap water is contaminated and very unhealthy, (and as we have said, local health statistics back this up). Bottled water sales maintained positive volume growth in 2003, with sales reaching 370.5 million litres, making it the second largest sector by volume in the Egyptian soft drinks market.

Innovation is key to sales. Nestlé Waters in particular has set up special sales organisations for distribution to unique types of sales outlets. Street vending is a classic example of adapting to the demands of local consumers - Nestlé Waters sells its Baraka to consumers in the street via mobile tricycles.

In the fruit juice sector, virtually all 100% juice is made of pulp, which is usually imported, though the local fruit juice industry has fought its corner. Sporty fruit juice, operated by Blue Stone Trading, a Cairo-based family business that started out in 1990, has proved popular with the younger generation and school children. Reflecting growing tastes, the company is shortly introducing a new range of flavours, including pina colada and cranberry juice. However, the company imports all ingredients from the United States and the United Kingdom.

"The performance of soft drinks in Egypt is greatly dependent on the performance of the economy as a whole, and what this means for disposable incomes," said Mr Benbihi. "If the Egyptian economy recovers, then some of the vast potential in the market will be realised, as the climate and attitudes towards alcoholic drinks favour growth of soft drinks in the longer term."

Morocco

Sales of soft drinks recovered in 2004 sales from a dip to historical levels with off-trade value and volume growth rates of 8% and 10% respectively, according to Euromonitor.

The drinks market growth can be explained by the increase in sales of Pepsi-Cola, the establishment of new cola brands and the significant marketing efforts made by companies to stimulate sales. Another important factor influencing growth was the price reduction strategy applied by Coca-Cola in 2004, with one litre plastic Coca-Cola bottles now Dh1 - Moroccan Dirham (10 US cents) cheaper.

Sales of soft drinks rose by 80.8% between 1997 and 2004, according to Euromonitor, mostly propelled by a surge in bottled water by 97.7%, from 404.8 million litres to 800 million litres. In terms of volume, bottled water is now the largest sector in the country with off-trade sales reaching 725 million litres. Carbonated bottled water remains less popular than still bottled water as consumption is generally seasonal.

Unlike most countries in the region, Morocco has several well-established local brands, established more than 20 years ago, particularly in the bottled water market. "Morocco has a lot of mountains with sources of pure water," said Mr Benbihi. "Prices are low and competition between the brands is strong." The largest player remains Sidi Eli, which has 65% of the bottled water market. The multinationals tend to trail in with around 4% of market share.

Superficially, the fruit and vegetable drinks market looks buoyant, with growth of 25.7% between 1997 and 2004 but the detail is less encouraging: this sector is the smallest in the market and sales last year only reached 55.6 million litres. The market, which was led by local company and sole concentrate producer Frumat SA, has struggled to recover from a plague of locusts that affected the southern citrus growing areas in 2004. Frumat has since gone bankrupt. As a result, Morocco became a net importer of juice and concentrate and is likely to remain so in the medium term future. According to the US Department of Agriculture (USDA) Foreign Agricultural Service: "There are just three single strength juice manufacturing plants in Morocco that are hardly able to meet the local demand for consumer oriented single strength juice. Given the prices of the fresh citrus in the local market, the local citrus processors will continue to face strong competition from imported juices."

Lifestyle changes are also affecting the sales of drinks in the country. The emergence of the supermarket is proving immensely popular with the country's emerging middle class and the large stores, such as Cofarma Holding and Chaabi Group, play an important role in boosting off-trade sales. Traditional fresh drinks, made and sold instantly and cheaply at stalls also provide strong competition to the fruit juice market.

The tea and coffee industry also continues to make headway in the country, again due to cultural mores: Moroccans are influenced by French coffee and tea culture, coupled with their preference for hot tea and coffee, goes against the development of ready-to-drink caffeine products.

Algeria

Bottled water is the major area of interest in Algeria. At 550 million litres, with an annual bottled water consumption per inhabitant of more than 16 litres at the end of 2004, the bottled water market in Algeria displays a strong growth potential, with annual growth in consumption at more than 22% in recent years, according to Euromonitor.

Earlier this year Nestlé Waters announced the creation of a partnership with the Zahaf Brothers, owners of the Boissons Gazeuses des Frères Zahaf (BGFZ), the leading players in the beverage field in Algeria and specialists in the production and distribution of bottled waters and carbonated beverages. The partnership took over all of the BGF group's bottled water business, the Sidi El Kebir water brand and has a distribution agreement that will enable it to take advantage of the network and expertise developed in Algeria by the BGFZ group. Since the start of the decade, BGZF has been the exclusive Algerian bottler and distributor of the Orangina and Mecca Cola brands. In 2001, the BGFZ Group added the natural still mineral water brand Sidi El Kebir to its business portfolio.

By the end of last year, this brand was in second position on the fledgling bottled water market in Algeria, with a substantial market share.

A spokesman for Nestlé Waters said that Algeria would play an important role in the company's development strategy for the Africa/Middle East region. "It's located in the heart of the Maghreb countries, with 34 million inhabitants and perspectives for double-figure growth in annual consumption per inhabitant," he said. "It represents a growth booster which should enable Nestlé Waters to develop its positions in North Africa. North Africa offers real development opportunities for our brands."

A spokesman for the BGZF group said the investment would also benefit local industry and customers. "It will enable us to consolidate activities in the bottled water sector throughout Algeria. It also means we are able to offer Algerian consumers a larger line of products and give us access to other brands to consolidate the attractiveness of our product mix throughout the country."

Tunisia

Although per capita income at US$2,630 is modest, Tunisia is seen as the market with the largest potential in the region. Living standards are higher than in Morocco or Egypt and growth is described as "quick and dynamic" by Mr Benbihi. Tunisia's consumption of bottled water is calculated to be 20 litres per capita per year, compared with just six in Egypt while similar comparisons can be made for carbonates and soft drinks. At present the market is dominated by local players who enjoy protection from international brands thanks to the tariffs on European and North American goods.

The leading local drinks company continues to be Société Frigorifique Brasserie de Tunis (SFBT), which produces its own brand of soft drink, Boga - a local version of 7UP - and owns the local franchise for Löwenbräu beer. The company has recently updated its bottling plants to European standards and profits have grown at 21% a year in recent times.

Nestlé Waters has no plans to set up production in the country. "It's not a major country for us at the moment," said a spokeswoman. "We are interested in value not volume and that is crucial in countries which have low per capita incomes."

Yet this will change as the tariffs on international products dwindle away. "The challenge will come when the multinationals enter the scene," said Mr Benbihi. "There will no place for the local brands as they don't have the capacity to cope with the competition. The multinationals will take over the best ones and lower prices to compete and put their sophisticated advertising into place. That's life - it has happened in other sectors of industry in the region."

Libya

Recent political developments in Libya have not passed the drinks industry by. A country that for years has been bedevilled by maddening bureaucracy and anti-competitive rules has now stepped in from the cold. A new liberal economic policy has been announced which involves the privatisation of 360 state-owned enterprises, including several soft-drink factories. The turnaround appears to be genuine and is led by Shukri al-Ghanem, the Harvard-educated Prime Minister, who is an ardent advocate of privatisation, foreign investment and the scrapping bureaucratic controls. At the end of year, the country staged its first international food and drinks exhibition.

If historical challenges were not enough, Libya presents immense cultural hurdles for the drinks market. No alcohol is drunk in the country but there is a considerable production of local mineral water of high quality, as well as soft drinks, local and imported fruit juices. However, eating and drinking on the streets is not allowed and it is considered rude to drink while walking: if you want a soft drink you go to a café.

Despite these challenges, foreign investment is increasing and is backed with optimism by some of the world's leading brands. Last autumn Pepsi's franchise bottler in Libya presented a case study of the re-launch of the drink in the country at a Libya-US Enterprise Conference in Washington. According to Khaled M. Rashed of One Nine Trading International, which is Pepsi's franchise bottler, the company now holds 75% of the market share for soft drinks in the country.

"Local competition is still weak," said Mr Benbihi. "Once the multinationals are fully allowed in this will be a huge and important market. The local players are not as strong or as big as they are in Tunisia or Morocco."

Syria

Syria took tentative steps in 2005 to open up its drinks industry to foreign competition, with Pepsi and Coca Cola taken off a blacklist and foreign mineral water imports allowed for the first time. Pepsi and Coca Cola were blacklisted along with other US and western firms more than 50 years ago by the Damascus-based Bureau for the Boycott of Israel, which is connected to the Arab League. But despite Syria's Economy Minister lifting the ban at the end of June, Pepsi had been operating in Syria "for a while" a Pepsi spokesman told just-drinks.com.

"What happened was the ban was for the brand but not the company. Pepsi were required to declare no business interests in Israel, so that requirement has now been dropped," he said.

Pepsi already has a bottling plant in Syria, run by the Joud Company, which controls 20 to 25% of the soft drinks market with its brand Mandarin and Seles juices. Joud started distributing Fanta in September, and is to start bottling Pepsi in the near future. Cola-Cola also intends to establish a plant.

Soft drinks have grown steadily in recent years, up 6.5 % in 2004 from the previous year, according to IMES. The US$147 million market is highly fragmented between five major brands and around 100 smaller brands, usually of the returnable glass bottle variety, which account for around 10% of the market.

The rest of the market is divided between Cadbury-Schweppes/Salsabil at 30%, which has five bottlers, including brand Canada Dry, Ugarit 15%, Master-Cola around 8 to 10%, and RC Cola 4 to 5% market share.

A Cadbury-Schweppes representative said he expected static growth in the sector this year due to increased trade prices and high packaging costs. The fragmented market's low trade prices are also affecting advertising spending.

Fruit juices accounted for 15% of the overall drinks market last year, with increased imports from Lebanon this year were expected to push sales by 5%. Also due to little health awareness and the plethora of fresh-fruit bars dotted around the major cities, further expansion is likely, but hard to predict.

Alcohol sales are low in Syria due to the country's Muslim population, although consumption is probably higher than Jordan. No statistics are available for either country. One of Syria's brewers, Al Chark Beer, produces a mere 6 million litres per year that is solely consumed locally.

Until this year bottled water was controlled by the state, with Balkein, 51% owned by the government, dominating the market. With the government allowing foreign water imports for the first time, there has been a deluge of players entering the market from Lebanon, Nestlé Pure Life from Jordan and Masafi from the Gulf. An estimated 40 proposals, including one from Nestlé, have been submitted to the Syrian government to manufacture bottled water this year, but the state has dragged its feet over the necessary changes in the law. There are no statistics on water consumption in Syria, but sales could increase if economic conditions improve, the Cadbury-Schweppes representative said. Prospects for economic growth generally in Syria are not positive however, with high unemployment and the increasing risk of international economic sanctions being imposed on President Bashar Assad's regime over demands for it to stop meddling in neighbouring Lebanon and cooperate with the inquiry into February's assassination of former Lebanese prime minister Rafik Hariri.

Lebanon

With a population of around four million Lebanon is a relatively high consumer of drinks when compared to its more populous neighbors. All sectors of the drinks market have grown in the past decade, but the events of the past year have caused marginal setbacks in some sectors.

The assassination of Mr Hariri in February, the resulting withdrawal of Syrian forces, and a string of bombings, focused mainly on Christian areas, have hit Lebanon's economy hard. Tourism, one of the country's major earners, dropped 13.6% in the first nine months of 2005, compared with the same period in 2004.

Heineken, which owns local brewery Almaza, saw sales drop a staggering 35% in the month following Hariri's death. Although Heineken has since recovered ground, the company has put on hold plans to build a new brewery in Lebanon.

Beer is not a year-round consistent seller however, being seen as a summer thirst quencher when 70% of sales occur. On average Lebanese drink only 4.5 liters per person annually, drastically less than the European average of 75 liters. Heineken holds 60% of the beer market following the acquisition of Lebanese beers Almaza and Laziza in 2002. The remaining 40 % are imported, one third of which are Heineken and Amstel beers.

Despite shelving the plan for the beer plant, Heineken is to build a non-alcoholic beer factory to capitalize on rising consumption by the country's large Muslim population and tourists from the Gulf and Saudi Arabia.

Lebanese wines have enjoyed bumper years since the end of the civil war, with vineyards increasing output to capitalise on rising export demand. Chateau Kefraya, Ksara and Domaine Wardy dominate local consumption in a fast growing sector that was valued at US$27 million in 2004. Third player Domaine Wardy is rapidly moving up the ranks through a clever marketing campaign that plays on heightened Lebanese patriotism following the Syrian withdrawal in April.

The spirits market is valued at US$40 million, with Lebanese drinking approximately 3.6 million bottles of spirits every year, roughly one litre per person. Increased vodka sales have also driven growth in the energy drinks sector, led by international label Red Bull.

International players dominate carbonated soft drinks sales, with Pepsi controlling the lion's share at 83% of the local market. Coca Cola, which has held onto the remaining 17%, was hit badly by boycotts three years ago, losing ground to its global rival. The companies agreed on a price raise and have adopted a dual packaging approach for the different socio-economic sectors of society. In lower income areas returnable bottles are sold, with 250 ml bottles 250LL - Lebanese Pounds (15 US cents) and 1.5 litre bottles 750LL (50 US cents), whereas in the capital a 330ml can is 750LL (50 US cents) retail price.

Demand for fruit juices is growing, particularly for non-100% juices, but there is stiff competition between Lebanese brands Bonjus, Maccaw and Kassatly-Chtaura, and Nestlé subsidiary Libby's.

Lebanon's mountain ranges have provided the country with a well-established bottled water market. There are minimal to zero imports of non-premium waters and only one international player, Nestlé, which bought into local brand Sohat in 2001. Nestle accounts for 27.5% of retail sales with brands Sohat and Nestle Pure Life, but has faced strong competition in the fragmented market: Rim (11 %), Tannourine (11 %), Sannine (4.2 %) and Sabil (3.4 %), according to AC Nielsen.

Poor water quality and a vibrant restaurant and café sector have contributed to high bottled water consumption at 33 litres per capita per year. According to an AC Nielsen MAT, the total retail market volume as of September 2005 was 133 million litres, with 45 percent of all retail sales in the 1.5 or 2 litre format. Although there is a proliferation of 'water shops' selling unsafe filtered municipality water, sales of bottle water, including the 10 litre format is up 7.7 % this year according to AC Nielsen, although Nestlé puts the figure at a more realistic 3.6 % annum growth. The total volume of 10 litre and home delivery 19 litres is estimated at another 120 million litres, with home and office delivery expected to increase 3 to 5% per annum.

Jordan

Jordan's soft drinks market was worth US$115 million in 2004, up 2.5% from the previous year, with similar growth expected in 2005. The effects of the November 9 bomb attacks in Amman on the economy have yet to be evaluated, but The Economist predicts there will be a short-term adverse impact on both tourism and investment, which could affect drinks sales. The expansion of the soft drinks market will also require greater economic development with 30% of Jordanians living below the poverty line (2001 est.) and an unofficial unemployment rate to match.

In the short-term, drinks manufacturers are banking on around one million relatively affluent Iraqis and Syrians that have come to live in Jordan over the past two years to maintain growth.

Pepsi and Coca Cola dominate the market with 77.2% and 22.8% market share respectively. A Coca Cola spokesman said popularity of the soft drink had declined since the 9/11 attacks in the USA, largely due to anti-American sentiment and imports of Syrian cola brand Ugarit.

In arid Jordan bottled water, pumped from under underground water tables, is still a developing market, according to Nestlé, who acquired 75% of market leader Ghadeer Mineral Water in 2002. Indeed, Lebanon consumes almost three times as much mineral water as Jordan's 43 million litres, despite its significantly smaller population. And even though Jordanian water is exported to Iraq and the West Bank, water resources are limited in much of the country, and tap-water is not considered safe to drink. Sales as a result have increased in the A and A/B economic consumer markets, bolstered by a case of highly polluted tap-water in 1998.

Foreign companies have taken interest in Jordan's fledgling water market, with bottled water imported from the Gulf, such as Oasis and Masafi. Pepsi is reportedly considering the launch of Aquafina in the near future.

Nestlé, a major player in Lebanon, has now cornered 48 % of the market with brands Ghadeer and Nestle Pure Life. The rest of the market is split between local bottlers Marwa at 12.4 %, Atheb at 6.2 % and Hada at 3 %, according to AC Nielsen. DISI, which holds 14.5 % on a MAT basis, was recently acquired by home and office water supplier Sabeel, which now accounts for 9.4 percent of the overall market. Category growth for home and office supplies has been high at 7 % per annum.

In predominantly Muslim Jordan, alcohol consumption is low, with the Chamber of Commerce unable to provide any statistics on the sector. Alcohol producer and importer Eagle Distilleries controls 85% of the local market, producing over 3 million bottles of spirit and wine a year.

Israel

Sales of soft drinks are expected to increase by 56% in constant volume terms between 2004 and 2009 according to Euromonitor, riding on the back of growing health awareness among Israelis for mineral water and fruit/vegetable juices. The soft drinks market, valued at NIS (Israeli shekel) 732 million (US$159 million) is set to expand from 1,142 million litres last year to almost 1.3 billion litres in 2008.

Israeli teenagers have helped spike sales by topping the list on soft drinks consumption amongst 15 year olds around the world, an Economist study reported. Around 58% of boys and 54.4 % of girls surveyed drank soft drinks everyday.

A decline in the cost of a 330ml soft drink, from 1.3 NIS (US$0.28) in 2002 to 1.2 NIS (US$0.26) in 2004 has also helped maintain a steady 2.5% growth rate despite increases in the fruit juice sector. Off-trade volume sales have increased by 10% a year.

Nearly all soft drinks sold are international brand names, with Coca Cola the market leader across the board. The Central Bottling Company, known locally as Coca Cola Israel, produces Tuborg beer, Neviot water, tea, and fruit juice. And this year this year the company entered the wine market with a 51% controlling interest in the Tabor Winery.

The move is a sound one on Coca Cola's part, with wine consumption doubling over the past fifteen years from 3.5 litres per head to 7 today. Beer may dominate alcohol sales, accounting for 62% of total volume sales at 38 million litres, but in value terms wine accounts for around 38% of total sales at NIS 779 million (US$169 million) in 2004.

Indeed, alcohol sales in Israel grew by over 4% in 2004, reaching NIS 2.213 billion (US$481million) and 61 million liters, up from NIS 2 billion (US$434 million) and 56 million litres in 2002. Exports of Israeli wine are also increasing by a double figure percentage year on year, wine and alcoholic beverage exports rising 7.6% to US$9.9 million between January and September 2005. The Carmel, Balkan and Golan Heights wineries account for over 75% of the local market, with imported wines accounting for 25% of overall wine sales.

Strong growth in the alcoholic market is also expected now the intifada is over and the country is slowly coming out of a recession, an Israeli Wine Council spokesman said.

The Israeli beer market is highly competitive with Tempo Beer Industries, holding the Heineken licence, controlling 50% of the market with Israeli beers Maccabee and Gold Star. Carlsberg has a 31% market share.

Beer sales have been hit recently by strong growth in 'alco-pops,' particularly Bacardi Breezer and Smirnoff Ice, in recent years. Sales grew 3% in volume terms and 4% in current value terms in 2004, according to Euromonitor.

As for other countries in the region, bottled water sales in Israel spiked following a tap water purity scare in 2001. Growth has continued to rise ever since in the highly competitive market with three major players dominating the market: Mei Eden, the Central Bottling Company (Coca Cola) and Tempo. In 2004, an Israeli court ruling blocked a merger between market leader Mei Eden, 20% controlled by Groupe Danone, and Yafora Ein Gedi. A joint distribution deal was struck between the two players.

CONCLUSION

THE DRINKS markets in the Levant and North Africa are one sector of the region's economy that is growing, despite sluggish overall economic growth in most countries in the region.

The hot climate that dominates these countries for the majority of the year means a continual demand for soft drinks, with water and fruit juices the biggest gainers in the past few years.

Demand for water is likely to continue to grow as populations increase and access to 'safe' water declines, reflecting the global water market, which is expected to increase threefold by 2008.

In such a highly politicised region there is a wariness of international brands, particularly American. Indeed, international brands such as Coca-Cola have faced tough times since 9/11, largely due to anti-American sentiment over political support for Israel and the invasion of Iraq. Nonetheless, there have been no major consumer boycotts across the Middle East and North Africa since early 2001, when massive boycotts took place and Coca-Cola, in particular, saw sales slide.

To counter the American image of the drinks giants, Coca-Cola has used Arabic pop stars, such as Lebanese singer Nancy Ajram, and Pepsi Egyptian pop star Amr Diab to give an Arabic face to the products. Coca-Cola has a long way to go however to compete with Pepsi's 75% slice of the Middle Eastern carbonated drinks market, although the company's presence in North Africa is growing.

Israel is the exception to Pepsi's regional dominance, with Coca-Cola having a hand in every sector of the market, even a stake in a winery.

In the Arab world, European soft drinks companies are likely to be the biggest gainers from the anti-American stance in the region. Nestlé has made the biggest inroads in recent years, gaining market share in the water markets of Lebanon, Algeria and Jordan, and now has its eyes on Syria. Syria could be one of the region's major soft drinks consumers if economic reforms occur and the country avoids being subject to international sanctions. Libya is also coming in from the cold, with a potentially lucrative market once the sector is de-regulated.

The region's current political problems can have negative consequences for international companies however, as Coca-Cola and Heineken experienced in recent years. Heineken, which has an effective beer monopoly in Lebanon, saw sales plummet following the assassination of Rafik Hariri in early 2005. But if greater stability and economic growth occurs across the Middle East and North Africa, the region's youthful population may ensure that soft drinks consumption will soar, undoubtedly leaving room for international brands to slide in.

LINKS:

www.euromonitor.com

www.nestle-waters.com

www.geocities.com/sportyjuice

www.alahrambeverages.com

www. Coco-cola.com

www.sannine.com

www.balkis.com

www.nohasal.com

www.ksara.com.lb

www.chateaumusar.com.lb

www.domainedestourelles.com

www.eamlb.com

www.salsabil.com

www.gicjo.com

www.cocacola.co.il

www.tuborg.co.il/

www.tuborg.co.il/

www.carmelwines.co.il

www.israelwines.co.il

www.golanwinery.co.il

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