Biborteni mineral water producer, with 12m-euro turnover last year, is expecting sales declines or even stagnation in 2009 year-on-year, amid the recent problems in the product distribution chain.
"Mineral water bottlers can be hurt by the problems of distributors and of traditional stores that are short of cash for orders or worse, have defaulted due to the frozen lines of credit," says Madalin Simion, brand manager of Biborteni.
Financial system turmoil is leading to the bankruptcy of small distributors that lack cash. The number of insolvent distributors has risen in recent months, according to market data. Cash pressures could drive many water bottlers out of business in 2009, believes Simion. "Large companies are not protected against such problems, but on the contrary large players also have large bank debts," the manager adds.
At the end of 2008, Biborteni announced it had put a 7m-euro investment in Covasna plant on hold, as it could not get financing. The project was due to be finalised in late 2008 or 2009 and was meant to double the company's water production capacity, now standing at 80 million litres a year.
The producer saw sales slow down in the second half of 2008 amid the deteriorating economic conditions.
The company puts 2008 growth at 10% compared with the previous year. "I don't know if we can speak of sales increases this year. At best, there will be positive dynamics on certain segments," states Simion.
The company plans to launch new products this year, too, in a bid to add new categories to its portfolio. "I don't believe the crisis has reached our customers, so that, in terms of consumption the market should expand this year. We will probably have a better image about what's happening on the market in the second half," maintains Simion. "Now, uncertainties over lending and the exchange rate are too high for us to be able to make any projections," he added.
Biborteni is controlled by some of the shareholders of Murfatlar wine producer and of Salonta charcuterie products, currently employing 230 people. Biborteni's biggest rivals are Romanian mineral water producers Romaqua, Coca-Cola HBC Romania, Bucovina, Perla Harghitei, Apemin Tusnad, on a market whose sales stood at an estimated 1.25 billion litres in 2007.
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