Jovan Radosavljevic, Coca-Cola HBC Romania: Coca-Cola HBC strives to be a global leader in sustainability

In an insightful conversation with Business Review featured in the “Industries to watch in 2024” cover story of the February edition of Business Review Magazine, Jovan Radosavljevic, General Manager at Coca-Cola Hellenic Bottling Company Romania, shared his seasoned perspectives on the current state and future outlook of the manufacturing industry. As 2024 unfolds, Radosavljevic discusses the dual nature of opportunities and challenges facing the sector, particularly within the beverages industry, emphasizing the need for a stable fiscal environment to sustain growth.

As members of the beverages industry, a sector that has been impacted in the past two years by successive discriminatory measures, we hope to have a more predictable environment, especially in fiscal terms, this year, but also in the years to come. This is something that all industries need, to continue investments that provide growth. The rise of the VAT rate from 9% to 19% for soft drinks, implemented at the beginning of 2023, produced a 10% drop in our sector’s volumes last year. Starting with January 1st, 2024, we face a completely new accise tax applied only to our sector – sugar tax for non-alcoholic beverages – that will have an additional impact not only on our business, but on the entire value chain, affecting mainly small traders and customers that are already facing a decreased purchase power. Another element of price increase comes also from last years’ evolution of production and raw materials costs. Overall, the external environment has been volatile in Romania and this plays a negative role on medium-term plans of companies such ours.

For this year, we continue to build on our strengths, consolidating our core portfolio, while grasping the opportunities that arise in the newer teritorries for us, for example coffee and spirits. Innovation continues to be at the forefront of growing the business and transitioning to more sustainable operations. We are a company that has been present on the local market for almost 33 years, with a strong commitment to grow sustainably and a constant contribution to the local economy. Despite all the challenges I mentioned before, we remained true to our sustainability strategy and we continued to inaugurate significant investment projects and to launch new ones, the most recent being the in-house recycled PET (rPET) production facility installed in our Ploiesti plant.

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Consumers are feeling the pressure of prolonged and combined economic impacts. Purchasing power has declined significantly, as there is a compounding effect of prices increases. Real wages have fallen as the cost of living rises, further exacerbating the constraints felt by consumers, and lengthening the timeline of inflationary impact. Rising food prices is by far the biggest concern among consumers followed by increasing utilities and economic downturn. In this context, most consumers are making calculated spendings, cutting back on discretionary costs and seeking lowest prices. This behavior has determined us to reassess our focus points as a business and adjust our strategy to address affordability challenges consumers face. We have, for instance, dedicated more resources to developing consumer promotions and ensure a better accessibility of our products.

Coca-Cola HBC strives to be the beverage leader in all its markets as well as a global leader in sustainability as proven by ranking first place in the Dow Jones Sustainability Index many years in a row. It’s a bold objective supported by solid investments and setting ambitious goals such as net zero emissions throughout the entire value chain by 2040 and contributing to reducing packaging waste. Romania is a very important market for Coca-Cola HBC and our latest sustainability projects are seen as a best practice within our Group in terms of building a green economy while also positioning ourselves as the most sustainable and transparent company in the local Corporate Sustainability and Transparency Index developed by the consultancy company The Azores.

I believe that the future of any business, in any industry, depends on how fast and efficiently we embrace changes that contribute to more sustainable operations and a greener economy. It’s the  natural way that businesses should be evolving and investment in innovation is a must.

At Coca-Cola HBC, our objective is to create a circular economy for our packaging and we have reached great milestones in Romania. Last year we inaugurated a pioneering project in the local beverages industry – our in-house recycled PET production unit. The investment made by the Coca-Cola System, totalled at 55 million lei, is a premiere on the local market – we are the first local beverage producer with internal capabilities to produce recycled plastic. The state-of-the-art technology used at our plant in Ploiesti has helped us complete transition of our entire PET packaging portfolio to 100% recycled plastic packaging. As a next step, we count on the newly introduced Deposit-Return System (DRS) for beverages packaging to provide us with the quality material that we can recycle in our packaging, closing the loop. Therefore, the successful implementation of this national project in 2024 is a key priority for us.