Britain's Virgin Drinks enters beverage market in Israel
After almost two years of preparation, the British group Virgin yesterday entered the soft drinks market in Israel, with a modest investment of $1.5 million in advertising and another $1 million in bottle development, packaging and production.
The fizzy beverages will be sold via Mayanot Eden, using the Virgin brand name.
Of its 50 drink products, Virgin is launching only seven flavors, including vanilla cola, red grapefruit, grape, and lemon lime. The sodas will be sold in individual 500-mL bottles, as well as 1.5-litre family-sized bottles.
Coca Cola shouldn't be losing any sleep: Mayanot's goal is to achieve a modest 2-3 percent of the market. At most, Virgin will be competing with Tempo, which markets Pepsi products and controls only a few percent of the market.
Mayanot believes the Virgin sodas will generate revenues of about NIS 40 million in the first year - a small fraction of the annual NIS 2.6 billion market.
"Our objective is to offer the consumer more options, in numerous and varied flavors, and not to stick only to the four existing flavors - Cola, Sprite, Kinley and Diet Cola," said Yair Nehmad, CEO of Mayanot.
Jonathan Cockport, the international marketing director for Virgin Drinks has high hopes for the venture. "Today, we are more professional; we know the field of carbonated drinks better; and we believe, therefore, that we will be successful," he said.
Production will be carried out at Mayanot's Super Drink plant near Jerusalem, in a disputed area outside the Green Line. Cockport said the plant's location is not a problem, despite the fact that Britain is part of the European Union.
"The fact that the plant is situated in the territories doesn't matter to us. It's a production plant and, as long as it provides the proper return and quality products, the location doesn't play a role," he said.
The advertising campaign, starting next month, will target 18-25 year olds. "The studies and reviews we have carried out show that this age group constitutes 44 percent of the total number of carbonated drink consumers in Israel," Nehmad said.
"We are basing our business plan on repeat purchases among a small group in the population that will generate revenues of $40 million a year for us. The operations of the Virgin brand name are intended to generate profits from day one."