Consumption of soft drinks in eastern Europe rose by 9 per cent in 2003 to 25,900 million litres, a massive 45 per cent more than in 1999, according to analysts Zenith International.
"With the economic difficulties of the late 1990s becoming a more distant memory, soft drinks manufacturers are benefiting from the increased spending power of consumers in East Europe," said Zenith research director Gary Roethenbaugh.
"There has been a 'westernisation' of many soft drinks categories, but the role of traditional local beverages remains well founded."
Headed by colas, carbonated soft drinks continue to lead with 37 per cent of total volume, according to Zenith International. But bottled water is closing in rapidly, rising by 12 per cent in 2003 against a 7 per cent increase for carbonates, and now accounts for 34 per cent of total soft drink sales.
A strong local heritage and the perceived health benefits, as well as the often less-than-ideal quality of the local water supply have all had a beneficial effect on bottled water sales there.
But the fastest growing segments in the east European soft drinks sector last year were energy and sports drinks, according to Zenith, growing by 22 per cent and 21 per cent respectively, albeit from very small bases.
Fruit juice/nectars also performed well, advancing 14 per cent to take a 13 per cent share of total volume sales.
According to Roethenbaugh, the dynamism in the market stems from a combination of local tastes with international trends. "A growing interest in healthier lifestyles has encouraged producers to innovate and diversify their product lines," he said. "Encouraged by the prospect of European Union enlargement, high profile international players are also entering the market, either organically or through acquisition."
Russia moved past Poland to become the biggest national market for the first time in 2003, although both have volume shares around 23 per cent, the report shows. The Czech Republic is the third largest market with an 11 per cent share, followed by Romania (8 per cent), Ukraine (7 per cent) and Hungary (7 per cent).
Russia, Ukraine and Lithuania recorded the highest increases over 2002 - up 14 per cent, 13 per cent and 12 per cent respectively.
The market leaders in terms of consumption per person, however, are very different. The more mature Czech Republic consolidated its lead with 281 litres per person, well in front of its closest rivals Slovenia with 200 litres and Croatia with 172 litres.
Future growth is expected to remain strong and steady, around 7-8 per cent each year over the coming five years, according to the report, reaching around 36,500 million litres in 2008.
Boosted by greater consumer health awareness and a shift from sparkling to everyday still water, bottled water should make the greatest gains to overtake carbonates in 2005 and achieve a leading 36 per cent overall share by 2008, Zenith said.
But with sustained investment by local manufacturers and wider appreciation of their health benefits, fruit juice/nectars are predicted to see a two thirds increase in the next five years and remain the third largest sector.