The Czech Republic’s competition authority has concluded a wide-ranging investigation into the production and retail sale of non-alcoholic beverages, finding no significant evidence of competition distortions, despite high market concentration and notable price increases in recent years.
The Office for the Protection of Competition (ÚOHS) published the final report of its sector inquiry covering the period January 2020 to June 2024, examining both manufacturers and retailers involved in the off-trade sale of soft drinks.
Prices rose sharply but mainly due to costs
The investigation was launched after retail prices of non-alcoholic beverages rose rapidly, outpacing the average price development in the European Union and several neighboring countries. Authorities sought to determine whether market concentration among suppliers or retailers could be contributing to the price increases.
According to the report, sales growth during 2020–2023 was driven primarily by higher prices rather than increased consumption. While the total volume of beverages sold rose only slightly, total sales increased by around 40%.
At the same time, wholesale prices increased by roughly 35%, while retail prices rose by about 38% over the same period. Despite these increases, the authority noted that the Czech Republic’s overall price level for non-alcoholic beverages remains among the lowest in the European Union.
Market concentration remains high
The sector inquiry found that the wholesale supply of soft drinks is relatively concentrated, with several major producers dominating the market. Key suppliers include the Mattoni, Kofola and Maspex groups, along with Coca-Cola and Veseta.
In several product categories—including mineral waters, flavoured waters, sports drinks, tonics and infant waters—a single supplier holds a leading position with sales shares between roughly 45% and 55%. However, the authority observed that in most cases the market share of the leading supplier declined during the period examined, suggesting competitive pressure from other producers.
Overall, the combined share of the five largest manufacturers decreased slightly, while smaller producers expanded their presence in the market.
Competition differs between manufacturing and retail
The authority highlighted a key distinction between competition at the manufacturing and retail levels.
Among producers, competition primarily occurs within individual beverage categories, such as mineral water, cola drinks or energy drinks.
In contrast, retail chains compete across the broader food retail market, rather than specifically within the soft drinks segment. This means retailers do not compete exclusively on beverage pricing but instead on their overall grocery offerings, including product mix and private labels.
Retail chains dominate distribution
On the retail side, the Czech soft drinks market is dominated by several large supermarket groups. The leading chains—Albert, Lidl, Kaufland, Penny and Makro—together account for roughly 65% to 75% of soft drink sales.
Despite this concentration, the authority concluded that no single retailer holds a dominant position in the broader food retail market.
Soft drinks are generally sold with higher retail mark-ups than the average across grocery products, although the study found that average retail margins declined by about five percentage points during the period analyzed.
Significant variation in pricing and margins
The inquiry examined detailed pricing and mark-up data for 300 major beverage products. Authorities found substantial variation between manufacturers, retailers and product categories.
Some products were sold with very low margins for extended periods, while others carried mark-ups of several tens of percent. Margins also fluctuated significantly over time.
VAT increase reflected in consumer prices
The authority also analyzed the impact of the VAT increase introduced in early 2024. The tax change was reflected in higher consumer prices across most beverage categories.
However, the investigation found no evidence that producers or retailers used the VAT change to significantly increase their margins.
Barriers to entry remain high
Although the sector inquiry did not uncover competition violations, the authority identified significant barriers to market entry.
These barriers include:
- high investment costs in production facilities
- substantial marketing requirements
- the strong bargaining power of major retail chains and established manufacturers
Such factors may make it difficult for new producers to enter the market and compete effectively.
No signs of collusion
Overall, the Office concluded that the investigation did not reveal signs of coordinated behavior or abuse of market power among either producers or retailers.
While several companies hold strong positions in certain product categories, the authority found that their pricing behavior and margins do not suggest excessive pricing or coordinated conduct.
