The year 2011 proved to be even more difficult for the Kofola Group than the previous one. Prices of raw materials for production of beverages reached their maximum levels over a period of several years, which was combined with sudden increase in the exchange rate of Euro against Polish Zloty in the second part of the year, aggressive price promotions by the competition striving to maintain market share, more expensive fuels which increase costs of transport, and in Russia, traditionally, as with every new year, increases in excise on spirits. Moreover, July and mid-August, the traditional time of harvests in the industry, proved to be exceptionally cold and rainy.
Despite unfavourable factors, we have managed to increase the proceeds by almost 5% as compared with the year 2010. In the reaction to very expensive raw materials, we implemented the savings programme throughout the Group in early 2011, which helped partly offset the effect of the increased prices of raw materials. We have focused our efforts on reducing flat costs. We were also looking for alternative suppliers of raw materials, we changed labels and bottles, saving in the areas which allowed cost savings without the impact on quality of the product for the consumer. During the year we managed to save PLN 36.3 on costs of sale and PLN 11.4 m on administrative costs. Apart from the implementation of the savings programme, we tried to transfer expensive raw materials on customers, but the rises were slower and on a smaller scale than assumed, said Jannis Samaras, President and the majority stockholder of Kofola S.A. Despite the difficulties, Kofola is moving ahead, as this is our recipe how to cope with slow-down in the market.
In April, the Kofola Group acquired Pinelli spol. s r.o., the producer of the oldest power drink (Semtex) in the Czech market. In September, a HotFill technology line was opened, and a number of novelties was introduced before the end of the year, including a whole range of syrups, Pickwick Just Tea ice teas, Jupik Smoothie and drinks with Aloe Vera bits. Apart from the products in the new line, Rajec “birch” and “daisy” flavoured waters were introduced, along with Paola syrups with summer tastes (lemon, orange and peach), cherry, extra herbal and a canned Kofola. In Slovakia, a new variation, Vinei “Rose” was introduced. The reactivated Woda Grodziska was well received by customers in Poland. Arctic Fito and Fresh flavoured variations were introduced in Russia.
The reported consolidated result for the year 2011 was affected by the restructuring costs in the amount of PLN 3.3 m in the Czech Republic and Slovakia, resulting from the merger of the teams operating in these markets and the related reduction in employment. Apart from savings, this operation was aimed at simplification of the structures and acceleration of the decision making process.
Kofola continued this clearing process within the Group. In January 2011, the process of liquidation of Klimo s.r.o. was completed, and the property of PCD was sold in May and June, along with halting its activities.
We face the year 2012, which will be at least as difficult as the last year.
We will again face high prices of raw materials (sugar, packages, fruit concentrates) and fuels, which will be translated into higher prices of products in the shops. We will systematically increase our presence in gastronomy, introducing further novelties or increasing production capacity, says Jannis Samaras, President and the majority stockholder of the Kofola Group.
