Anadolu Efes published its sales volume report for 2023. In the report, it was stated that there was an annual contraction of 4.0% in the last quarter of 2023.
In the report, Anadolu Efes stated that despite many challenges such as the high inflationary environment felt especially at the beginning of the year, natural disasters in Turkey and Pakistan, and increasing regional conflicts, sales volume declined slightly.
Anadolu Efes consolidated sales volumes contracted by 4.0% yoy in 4Q2023 and were realized as 22.4 mhl. In this period, beer group volumes posted strong growth thanks to international operations. In FY2023, consolidated volumes contracted slightly by 0.5% to 122.9 mhl. Consolidated volumes were below our full year volume guidance due to lower than expected results in soft drinks business in the last quarter.
Beer group shows strong momentum
In the last quarter of the year, Beer Group volumes showed a strong momentum and grew by a remarkable 12.8% to 8.1 mhl. The main driver of this growth was the strong performance of Russia, benefiting from the low base effect from the same period last year. Turkey, Ukraine and Moldova also contributed positively to the quarterly growth. Beer Group consolidated volume reached 35.7 mhl in FY2023. In FY2023, annual volume growth was realized at 5.0%, which was at the upper end of our year-end guidance.
International Beer Operations’ consolidated sales volume increased by 15.4% to 6.7 mhl. For the full year, volumes grew by a strong 4.2% to 29.5 mhl.
Russian beer volume performance continued its improving momentum in the quarter, registering a notable growth in the high teens. This growth contributed to the low single digit percentage growth rate recorded for the full year. The Russian beer market is expected to grow slightly in 2023, exceeding our expectations. The strength of the Russian beer market and our Russian operations in the second half of the year is mainly due to the low base effect from the same period last year. Although the competitive environment remains challenging, especially in terms of pricing, our long-standing focus on maintaining the balance between profitability and volume performance was maintained throughout the year. In 2023, we also expanded our portfolio in the energy drink category with a brand new brand called “Volt Energy”. Our brand rose rapidly in the energy drinks category and managed to rank among the top 10 brands as of year-end.
Our Ukraine operation continued its production with two factories. The Ukrainian beer market remains under pressure, with the size of the market indicating a contraction of more than 20%* from its 2021 level. Our focus throughout the year has been on balancing volume performance with commercial strategies, but we have seen competitive pressures, particularly on pricing.
CIS countries recorded a decline in sales volume in the fourth quarter, with an average contraction of low-single digit percentages in 2023 as a whole.
Our Kazakhstan operation contracted by low-to-mid single digit percentages in 2023, outperforming the market, which contracted by mid-to-high single digits on an annualized basis according to forecasts. As a result, we gained market share during the year. Demand was mainly weighed down by high pricing in the sector.
In Georgia, sales volume grew by low to mid-single digit in 2023, despite the high base of the previous year. Premium brands outperformed the rest of the portfolio, while Efes Georgia continued to gain market share in both on and off-trade. Also in the CSD category, despite stiff competition in pricing, one of our key CSD brands “Natakhtari” ended 2023 with volume growth.
In Moldova, volumes slightly underperformed the market, contracting by high single digits in 2023. The main challenges faced during the year were inflationary pressures as well as a shrinking consumer base due to population decline. On the other hand, the timing of pricing by companies operating in the sector lagged behind us. Nevertheless, the entry of new players and intensified competition in the economy segment increased the pressure on volume.
Turkey beer sales volume grew by 1.8% to 1.4 mhl in 4Q2023. As expected, the growth rate slowed down slightly in the last quarter of the year compared to previous quarters. This was due to the very strong base effect over the last two years. There was also a slight decline in disposable income in the last quarter as consumer confidence declined compared to the beginning of the year. Despite all this, Turkey was a very successful year for beer operations. Annual volume reached 6.2 mhl with annual growth of 9.1%. 2023 market share is estimated to be in line or slightly higher than last year.
Beverage group
CCI’s consolidated sales volume decreased by 2.6% y-o-y to 1.5 billion unit cases (“u.c.”) in FY2023. Central Asia and Iraq operations contributed positively to volume growth with 11.9% and 10.7% growth, respectively, while Turkey and Pakistan operations dragged down the consolidated volume performance. Overall, international operations’ volume share increased by 95 bps y-o-y to 63.1%. In 2023, Turkey was hit by the most devastating earthquake in the country’s history. The disaster affected more than 14 million people in 11 provinces across Turkey. From the first moments of the devastating earthquake, the Coca-Cola System mobilized to help people in the region. In addition to the repercussions of the earthquake, the elections in the second quarter and continued high inflation throughout the year also affected consumers’ appetite for spending.
As a result, volume in Turkey declined by 5.1% y-o-y and 21.8% in 4Q2023. The year-on-year volume decline in 4Q2023 was mainly due to lower purchasing power ahead of salary increases and reduced consumer appetite for spending due to sensitivities towards the political unrest in the Middle East, coupled with our specially diluted marketing campaigns.
The share of small packs increased by 187 bps to 33.6% in 2023, while the share of the on-premise channel improved by 265 bps to 30.1%. Continued focus on the low sugar/sugar free portfolio also yielded results, with the share of low sugar/sugar free portfolio in total sparkling sales increasing by 20bps y-o-y to 38.8% by 2023.
International operations posted a slight decline of 1.1% YoY in FY2023, mainly due to lower volume production in Pakistan. In 4Q2023, total international volumes declined by 4.7% y-o-y, while the decline in sparkling beverages was slightly higher at 6.3% y-o-y.
Quality portfolio mix focus continued to deliver positive results in our international operations. The share of small packs increased by 109 bps to 23.7% in 2023, while the share of the on-premise channel increased by 29 bps to 12.7%.
During this period, Pakistan also experienced the most difficult macroeconomic challenges in its history. Accordingly, the consumer confidence index fell to its lowest level in 11 years in the second half of the year. The local currency, the Rupee, hit historic highs against the US Dollar and depreciated by around 25% on an annualized basis. Inflation reached a 50-year high during the year, negatively impacting the purchasing power of consumers. Accordingly, CCI’s sales volume declined by 16.4% in FY2023 (on top of 13.1% growth in FY2022) and 31.7% in 4Q2023 (on top of 9.1% growth in 4Q2022). Our ongoing systemic efforts on marketing initiatives and execution capabilities again had a positive impact and CCI managed to increase its market share since the beginning of the year (Source: Nielsen, Urban Value Share as of November 2023).
Uzbekistan recorded the fastest growth among all CCI countries, up 25.8% YoY in FY2023 and 28.7% YoY in 4Q2023. Carefully implementing CCI’s successful business guideline in all its elements and building the right RTM infrastructure with focused chiller placements, Uzbekistan continued to deliver strong operational results.
In Kazakhstan, volume growth came in at 2.4% y-o-y, above last year’s 16.0% increase, but declined by 5.8% y-o-y in 4Q2023. As volume growth was 32% in 4Q2022 due to temporary migration from post-war Russia to Kazakhstan, volume growth in 4Q2023 was relatively weaker due to a very strong base. Full year growth was driven by the sparkling category, which posted a 4.7% y-o-y increase over the 19.7% y-o-y growth in 2022.