Kazakhstan Food and Drink Report Q3 2009
Business Monitor International, May 2009, Pages: 54
The Kazakhstan Food Drink Report provides independent forecasts and competitive intelligence on Kazakhstan's food and drink industry.
Despite a positive long-term outlook, the food and drink sector in Kazakhstan is set to experience a number of difficulties in the short-term – as consumer confidence tumbles along with the economy. As discussed in this recently published Kazakhstan Food & Drink Report for Q309, a number of key players in the country’s dynamic drinks sector have already reported major drops in their profits, as consumer confidence has taken a hit.
The substantial devaluation of the Kazakh tenge earlier this year has revived concerns of an escalation in inflationary pressures. While we believe that headline inflation will likely edge higher by end-2009, we stress that the destruction of domestic demand and decline in global commodity prices, will prevent inflation returning to its mid-2008 highs. Amid the continued escalation of the global financial crisis, the Kazakh government has unveiled a series of support initiatives aimed at cushioning the blow from tumbling asset prices and slowing growth. While these measures will go some way in easing the dislocation on households and firms posed by the global credit crunch, we caution that domestic demand will nonetheless collapse in 2009, unemployment will surge and real wealth will fall, with the net effect dragging the economy into recession.
In April, two key players in the country’s drinks industry reported major drops in their 2008 profits. Efes Breweries International (EBI) reported a 8.6% drop in its 2008 operating profit, which fell to US$73.6mn. This occurred despite a 24.1% rise in net sales, and a 5.5% rise in volumes. Meanwhile, Coca-Cola Içecek (CCI) reported that their full-year net profit for 2008 dropped 47% year-on-year (y-oy), again, despite a rise in sales in both value and volume. Sales in Kazakhstan, which is the largest contributor to the region’s volume at 52%, were reported to be a major disappointment and far behind expectations.
However, despite the spate of bad news, some companies are continuing to move forward with their investments, thanks to the strong long-term potential of the Kazakhstani drinks sector. Danish brewer Carlsberg, which is already the market leader in the country’s beer sector, announced in February that it had reached an agreement with Mexican brewery Grupo Modelo to expand their cooperation agreement to include nine new markets, including Kazakhstan. Under this agreement, Carlsberg’s subsidiaries in these various countries will distribute the Corona Extra brand, which is produced by Modelo. Carlsberg Breweries will also hold the exclusive rights to import, promote and sell the Corona Extra brand in these markets.
Beer remains the most popular alcoholic drink in Kazakhstan – the beer market has experienced booming growth in recent years. With competition in this sector heating up, not just in Kazakhstan, but also throughout the region, brewers who can afford to do so are shoring up their investments. While this current period is undoubtedly difficult for food and drink operators – with alcoholic drinks sales forecast to increase by 97.3% in value terms between 2008 and 2013 – the longer-term outlook for the sector is still positive.
EXECUTIVE SUMMARY
SWOT ANALYSIS
Kazakhstan Food Industry SWOT
Kazakhstan Drink Industry SWOT
Kazakhstan Mass Grocery Retail Industry SWOT
Macroeconomic Outlook
Table: Kazakhstan – Economic Activity, 2006-2013
FOOD
Industry Forecast Scenario
Food Consumption
Kazakhstan Food Consumption Indicators – Historical Data & Forecasts
Trade
Kazakhstan Food & Drink Trade Balance – Historical Data & Forecasts (US$mn)
Industry Developments
Market Overview
Agriculture
Food Processing
Canned Food
Confectionery
Dairy
DRINK
Industry Forecast Scenario
Alcoholic Drinks
Kazakhstan Alcoholic Drinks Indicators – Historical & Forecast Sales Data
Soft Drinks
Kazakhstan Soft Drinks Indicators – Historical & Forecast Sales Data
Industry Developments
Market Overview
Alcoholic Drinks
Soft Drinks
Hot Drinks
Mass Grocery Retail
Industry Forecast Scenario
Industry Developments
Market Overview
COMPETITIVE LANDSCAPE
Key Players
Food & Drink
Key Players: Kazakhstan's Food & Drink Sector
Mass Grocery Retail
Table: Key Players In Kazakhstan's Mass Grocery Retail Sector
Company Analysis
Food
Ardager Agricultural Financial Corporation
Nestlé – Kosmis
Drink
Heineken N.V
Carlsberg (formerly Baltic Beverages Holding)
Coca-Cola Içecek (CCI)
Mass Grocery Retail
Vester
APPENDIX
COMMODITY PRICE FORECASTS
Corn
Table: Corn, 2005-2010
Soybean
Table: Soybean, 2005-2010
Rice
Table: Rice, 2005-2010
Wheat
Table: Wheat, 2005-2010
Cocoa
Table: Cocoa, 2005-2010
Coffee
Table: Coffee, 2005-2010
Milk
Table: Milk, 2005-2010
Sugar
Table: Sugar, 2005-2010
COUNTRY SNAPSHOT: KAZAKHSTAN DEMOGRAPHIC DATA
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education & Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market & Spending Power
Table: Employment Indicators, 1999-2004
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Wages, 2000-2012
FOOD & DRINK BUSINESS ENVIRONMENT RATINGS
Ratings Methodology
Ratings Overview
Ratings System
Indicators
Limits Of Potential Returns
Risks To Realisation Of Potential Returns
Weighting
Weighting
BMI FOOD & DRINK INDUSTRY GLOSSARY
Food & Drink
Mass Grocery Retail
BMI FOOD & DRINK FORECASTING & SOURCING
How We Generate Our Industry Forecasts
Sourcing
- Ardager Agricultural Financial Corporation
- Nestlé – Kosmis
- Heineken NV 34
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