Emil Popescu, chairman and shareholder in Zarea Bucuresti alcoholic drinks producer, a top five player on the domestic market, expects flat turnover this year as a result of the falling consumption of alcoholic drinks.
"Consumption habits will not change, but consumed quantities will drop, with a shift to cheaper products to be registered(...)," states Emil Popescu, 45, chairman and shareholder in Zarea Bucuresti since 2004, through Karom Trading company.
Thus, he expects Zarea to end 2009 with turnover similar to last year's, of around 80m RON (20m euros). In 2008, the company's sales surged by over 22%. According to Popescu, this figure was also stalled by distributors, which, amid the first crisis signs domestically, have become more careful in managing liquidities.
In the first six months of last year, the company reported 5.5m RON losses. "Financial losses emerged only as a result of the falling RON against the euro and Polish zloty. We made operating income each year. We're now more concerned about recouping and maintaining market shares than about registered financial losses," says the representative of Zarea Bucuresti, the producer controlled by Ambra Polish company.
These results made Zarea representatives cut promotion budgets as early as 2008 and postpone investments to boost the production capacity scheduled for this year. Thus, while in 2007 Zarea invested between 3 and 4m euros to promote brands in its portfolio, last year the sum earmarked for marketing stood at only 2.8m euros, in net terms, while production investments amounted to 0.8m euros. For 2009, Popescu estimates a low budget, as well.
According to him, the alcoholic drinks market will stagnate this year and maybe even see a decline compared with last year.
Prior to '89, Zarea was a market leader along the sparkling wine, brandy, bitter, liqueur and vermouth categories, a position the company's representatives want to regain after the company lost market share from 1989 through 2004.
Zarea owns two production centres in Bucurestii Noi, where most products of the company's portfolio are manufactured, and in Otopeni.
The majority stake in Zarea Bucuresti is held by Poland's Ambra company, 51% , with the rest belonging to Karom Trading (41%) and small shareholders (8%).
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