Product Suitability
Fructal supplies fruit and vegetable juices, nectars, syrups and dilutable juices. The Czech market prefers fruit juices that have higher vegetable and fruit contents. A report by Euromonitor revealed that there was a decline in consumption of soft drinks in 2010 following health awareness by consumers (Euromonitor, 2011, pp.6).
Additionally, the Czech government is promoting health and wellness programs, which support consumption of functional water and fresh fruit juices. This support also includes the motivation of companies that provide fresh fruit and vegetable juices.
There is a high need for fresh frozen juices, non-concentrated hundred percent juices and reconstituted hundred percent juices (Zenith, 2008, pp.2). To monitor the quality of fruit and vegetable juices, government uses arms like the Public health Protecting agency and the Agricultural and Food Inspection Authority.
Nectar fruit juices make up 25-99% of the Czech’s juice market while juice drinks make up 24% (Euromonitor, 2011, pp.16). Fructal’s main competitors are Coca-Cola, Rauch, Linea Nivnice, Pepsi, Maspex Czech and kofola which constitute 68% of the fruit and vegetable juices market by 2010 (Euromonitor, 2011, pp.23).
In addition, the private label products make up 20% of this market share. These competitors have a strong market position with discounters and hypermarkets controlling the soft drink market.
Country Screening
After a market analysis of the European Union fresh juice market, the Czech Republic was chosen for its potential as an emerging market. An examination of this market reveals that consumers are sensitive in the purchase of fruit juices and nectars following the tough economic crisis of 2009 and 2010 (Euromonitor, 2011, pp.45).
This crisis made consumers to reduce spending on essential products. The main threat to Fructal is the flavoured mineral water and soft drink products that have low prices as compared to the fresh juices. The austerity measures introduced by the Czech government have made households reduce their spending in favour of these drinks.
Despite these challenges, the market will remain stable because many Czech households still prefer fresh fruit and vegetable juices. Consequently, the retail volume is expected to grow to 100% as from 2010 (Euromonitor, 2011, pp.46). Furthermore, the country is showing increased political stability, investor motivation and fewer regulations that favour Fructal investment choice.
Industry Market Analysis
The fresh juice industry market shows a decline in soft drinks consumption and a higher demand for fresh fruit juices. Fructal must consider players like Coca-Cola, Rauch, Pepsi and Maspex Czech as they contribute more than 65% of the market share. The store’s fresh juice sales will be affected by increased soft drink distribution from discounters and hypermarkets.
The fresh juice market is expected to grow at a rate of 2% as of 2010 and trade-off volumes reaching 20% for all sales by 2011(Euromonitor, 2011, pp.62). However due to the financial crisis of 2009, the projected volume sales for 2015 are 157 million litres, representing a drop of 1% from 2010.
The projection is that increased government regulations, health and wellness programs should encourage Fructal to venture into the fresh fruit juice and nectar market (Zenith, 2008, pp.1). Enriched and frozen 100% fresh juices are expected to take up 25% of the market share from increased consumer demands and interests (Euromonitor, 2011, pp.65).
Overall, the fresh juice market will experience consolidation from international and local manufacturers’ strong market presence, thereby providing Fructal a favourable market.
Reference List
Euromonitor, 2011. Country Report: Fruit/Vegetable Juice in the Czech Republic, Euromonitor International Report. Web.
Zenith, 2008. East Europe Fruit Juice Report, UK: Zenith International. Web.