UKRAINE at a Crossroads
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Coca Cola: An early investor catches the market share
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By Thomas Cromwell
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spacer Coca-Cola branded water tanks at the bottling plant in Ukraine

hen, at the collapse of the Soviet Union, Ukraine was spreading its independent wings for the first time in ages, one of the first major investors to move rapidly into the market was Coca Cola.

In 1992 the company set up its operations in Ukraine. Since then, “Coca Cola has invested a tremendous amount of money” in this market, says General Manager Walter Gordon, an American originally from Washington, D.C., who has worked at Coke for 13 years.

The actual investment figures are $272 million overall, plus €50 million in equipment. In 1994 Coke opened its first bottling plant, in the western city of Lviv.

The reason for this investment, he says, is the evident great potential of a new market with ever-growing demand “for high-quality products.”

Ukraine has a population of some 47 million, and while the rural areas remain largely underdeveloped today, the major cities, such as Kyiv, Lviv, Kharkiv and Odessa are all witnessing robust growth.

In 2012 the Euro Cup soccer competitions will be held jointly in Ukraine and Poland. As a lead sponsor, Coke sees this as a major opportunity for both expanding its market share and serving the development interests of Ukraine.

Gordon points to the way this international event is spurring development of the country and is responsible for great national pride. In addition to new stadiums, rail and road infrastructure, two new bridges will double traffic capacity across the Dniper River in Kyiv. A new terminal at Borispol, the main airport serving Kyiv, will improve air travel to the country significantly.

Gordon, who has been in the country two-and-a-half years, says the wild economic fluctuations of recent years, when double-digit growth was reversed into a 17 percent drop in GDP in 2009, “bring out the best in companies,” forcing them to adapt to a rapidly changing market environment. He says Coke has faired reasonably well through the downturn, and has emerged stronger than ever.

Coke is also very conscious of its profile in the community. It has established 100 playgrounds around the country in areas where children lack basic recreational facilities. This project has been carried out since 2006 in collaboration with the The Klitschko Brothers Fund, named for the famous boxing brothers.

Other “green” commitments include limiting carbon emissions and using “sustainable packaging,” to quote its Social Responsibility Report on Coke’s activities in Ukraine. It has collaborated with a range of partners on trash clean-up projects and the like.

Gordon sees Ukrainians as “very open-minded and curious.” He says they “appreciate the quality of ideas, not only the quality of products,” making them increasingly optimistic.

He says that available talent “is very good and getting better.” But the size of the talent pool is still too small. Nevertheless, of 3,000 Coca Cola employees in Ukraine, only Gordon and one other are expats.

Training includes dispatching managers to programs overseas in places like London and India. And, as a testament to the quality of personnel trained in Ukraine, several Ukrainians can now be found elsewhere in the international company.

Coke currently has a 31 percent value share of the Ukraine soft drinks market, and is expanding that percentage every year. It is number one in all its categories, except water and juice, where it holds the number two position.

Gordon says his wife and three children are all well adapted to life in Ukraine, and he describes his own experience as enjoyable. “It’s been fun,” he says.

 

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