measure and monitor the processes and report results ... - Refresco.de

Business review 2010
Review 2010
Looking back on 2010 we can state that the year started relatively smoothly, with a turning point mid-year where
we had to face major challenges. Our business was influenced by several factors: a persistently tough economic
situation, changing consumer behavior, customers and suppliers consolidating, and steeply rising commodity prices.
despite these difficult market circumstances Refresco has been able to achieve its financial targets. We managed to
grow our business, and were able to execute our acquisition strategy. Revenue increased with 7.4% to a level above
last year at EuR 1.224 billion.
The market
In 2010 the economic situation was still challenging for many
companies. The economic downturn of 2009 is by far not over,
as we can see in our industry and retail data. In fact we can say
that the consequences will continue to affect our industry for
several years to come. Where in 2009 the effects were limited
to financial institutions, in 2010 they spread to other industries
as well. Unemployment rates climbed in more and more
European countries, leading to changing consumer behavior.
Consumer behavior has become even more unpredictable than
before, and spending per head has gone down in every single
category, including food and beverages. This has led to the emergence
of massive opportunistic shopping behavior, with consumers
travelling from shop to shop to find the cheapest products
and the best promotions. Another trend we see is consumers
moving from expensive product propositions to cheaper ones.
In our own product range, for instance, we have seen a shift from
100% orange juice to juice drinks or nectars, and beyond the
juice category to the cheaper carbonated soft drinks (CSDs).
Among our customers, we see on the one hand retailers
competing fiercely on price, leading to all­out price wars on
the other hand is a consolidation in retailers’ buying to be able
to benefit from high­volume buying. More and more retailers
are joining large national or international buying groups such
as EMD, AMS, Agenor etc. Meanwhile retailers (including hard
discounters) are becoming more opportunistic. They will readily
give up their own private label product if they get the opportunity
to increase their margin on an A­brand.
A­brands, on the other hand, are stepping up their price promotions
to be able to maintain their sales volumes. This in fact
encourages consumers to look for price promotions and only
buy certain products if these are on promotion, thus further
enhancing their opportunistic buying behavior. As a result the
market share of private label products has stabilized in 2010.
In the second half of 2010, prices of all raw materials and
packaging materials showed explosive growth. This was partly
caused by poor harvests (orange, apple, pineapple, sugar,
cotton), but also by rising oil prices and investors massively
buying commodities to benefit from expected economic recovery.
Every year we are faced with movements in the pricing
of raw materials and packaging materials, but this year price
increases have been substantial, and volatility of the prices has
been high, across the entire range of raw materials.