PETpla.net Insider 11 / 2013

EDITOUR REPORTS 14 PET planet insider Vol. 14 No. 11/13 www.petpla.net April 22, 2013 Estambul We met: Cesar Jose Sarchi, CEO The mineral water of Argentina – continu- ing the tradition into the 21st century? For over half a century now Estambul has been produc- ing for the local market in and around Santa Fe, Argentina, a mineral water with a particularly high carbonate content, packaged in glass siphons. Since the introduction of PET in the company these brands have undergone a difficult time. Under pressure from the international industries that are moving into the region, Estambul is endeavouring to protect its customer base. Right in the middle of Santa Fe, the capital of the federal state of the same name in Argentina, is where the Estambul production workshop has been located for 45 years. Here I am met by Cesar Jose Sarchi who runs the tradition-based family enterprise together with a partner. Estambul has been a big name in mineral water in Santa Fe since 1948. At the time the company was the first in the region to supply carbonated water in siphon bottles made from glass. For 30 years the water has been marketed both with and without carbonic acid, as well as small quantities of soft drinks in PET bottles under the same brand name and, for the past three years, also in plastic siphons. Today Estambul sells a total of around 3.6 million bottles per year to supermarkets and families in the region in and around Santa Fe. “The PET bottle has changed lots of things for us“, explains Mr Sarchi who, as the son of one of the four founding fathers, is responsible for the company’s sales. “Before the PET bottle came along customers were coming back to us again and again to have their Estambul siphons refilled with our water. Since the introduction of the dispos- able PET bottle in Argentina during the 1980s practically anyone can sell mineral water – all of a sudden there were cheaper products available on the market and we lost a number of customers. In the wake of this we subsequently acquired a PET bottling plant from an Argentinian manufac- turer. However, we have the blow moulded bottles incorpo- rating a long neck supplied to us by a third party manufac- turer. Up to now we have not had sufficient funds to invest in our own blow moulding machine for bottles“. Subsequently international firms have also come on stream offering high volume at low prices and are making inroads into the market in Santa Fe. For Estambul, this has put further pressure on prices. Another concern is that the 70 employees of Estambul are now demanding pay rises to bring them up to the level of these international competi- tors and to strengthen their case, they are busily organis- ing themselves into trade unions. Pressure is mounting for this family business. “The sale of Estambul mineral water in PET bottles presents us with a challenge for an entirely different reason. The Estambul brand has always been characterised by what is actually an unusually high car- bonic acid content“, explains Cesar Sarchi. This, he goes on, cannot be achieved with the PET bottles currently avail- able on the market. ”However, consumers are less and less interested in brand names. The critical factor today is price”. As is the case for many traditional mineral water manufacturers in Argentina, Estambul relies on regular customers such as families as well as individual supermar- kets and kiosks. This explains Cesar Sarchi’s determina- tion to strengthen his existing customer base in the future, and his strategy is primarily based on high volume and low prices. However the cost of advertising to win over these new customers is hugely expensive. Despite all the difficulties the company is taking up the challenge with enthusiasm and commitment. Following the interview, and an interesting tour of the plant, Cesar Sarchi presents me with a whole bag full of Estambul promotional articles. He is particularly proud of the Estambul bottle opener for glass bottles: “Open the bottle and use this clip- on mechanism to reseal it. Result: Your Estambul water will stay fresher for much longer”. www.sodaestambul.com To enhance its appeal to the consumer, Estambul pays metic- ulous attention to detail. The first glass siphon dating back to 1948. A plastic siphon has been available for three years.