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Greece Food and Drink Report Q3 2007
Business Monitor International, Jan 2008, Pages: 68
The Greece Food Drink Report provides independent forecasts and competitive intelligence on Greeces food and drink industry.
In August 2007, some of the worst forest fires in Greek history were reported to have destroyed as many as 5mn of the country’s olive trees, with the Peloponnese peninsula being one of the regions worst affected. According to Sevitel, an association of producers and processors, as much as 5% of this year’s olive harvest may be lost, something which Sevitel believes may reduce Greek olive oil output for years. The Peloponnese peninsula generates 30% to 40% of Greece’s EUR9bn (US$12.3bn) olive oil production industry, which is the world’s third largest after Spain and Italy. According to industry sources, Greece produces on average 300,000 tons a year, meaning that a 5% output cut would represent a loss of about EUR45mn, at current prices. The damage inflicted on Greece’s olive oil industry looks set to lead to
higher olive oil prices in the months ahead. This development comes at a time when global prices of basic food commodities - including milk, wheat, barley and coffee - have been increasing as a result of rising global demand and the shift by a growing number of farmers towards the cultivation of biofuel crops.
In September, against this backdrop, the Greek competition authorities approved plans for the majority shareholder in the country’s largest food group Vivartia, to buy the rest of the company. Marfin Investment first announced in July that it planned to launch a formal public offer for the remaining 22.4% of Vivartia. Marfin began strengthening its position in Vivartia in early July, with the acquisition of a 30% stake for EUR549.8m (US$757.8m). Then at the end of July, Marfin increased its stake to
60.94% and revealed that it would make a public offer to buy all the remaining shares in the Greek food conglomerate. Vivartia was formed in June 2006 out of the merger between Greek dairy group Delta Holdings and the country’s largest croissant and snacks maker Chipita International; the food giant not only leads the Greek market for dairy products, baked goods, fruit juices and frozen and ready-made foods, but has a major presence in Central and Eastern Europe and a growing presence in the Middle East.
In June, it was reported that Vivartia planned to establish a joint venture in Saudi Arabia with Western Bakeries and Olayan Financing Company, with a view to catering to the markets of Saudi Arabia, UAE, Kuwait, Oman, Bahrain and Qatar. The announcement of the joint venture came just one week after Vivartia’s EUR18.7mn acquisition of Bulgaria’s largest dairy company, UMC.
The rise to predominance of Vivartia within Greece’s food industry is indicative of wider changes that have been affecting the industry’s manufacturing and retail sectors. Increasingly, it is larger operators that are coming to dominate the market, reflecting the extent to which consolidation and the growth of multinationals has come to characterise the market. Within the retail sector, the two market leaders, Carrefour Marinopoulos (which is owned by Carrefour of France) and Alpha-Beta Vassilopoulos (part of Belgium’s Delhaize Group), continue to report solid growth figures. Meanwhile the expanding discount sector looks set to receive a further boost sometime before the end of this year, as German discount retailer Aldi prepares for its first foray into the Greek market.
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