Latvia Food and Drink Report 2010

Latvia Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Latvia's food and drink industry.

In the Q110 Business Environment Rating (BER) matrix covering food and drink sectors of the 15 major markets in emerging Europe (which now include Turkey), Latvia ranks 11th, and again below its Baltic peers. The country’s food and drink market prospects – already constrained by a small and falling population – are judged to have been significantly worsened by the fallout from the sharp economic slowdown. Food consumption is expected to post negative 2009-2014 growth in US dollar terms, falling by 6.7% to US$1.94bn and considerably below the US$2.84bn recorded in 2008. Additionally, in its most recent publication of the corruption index, Transparency International notes that corruption in Latvia increased in relation to 2008. In the 2009 version, the country dropped from 52nd to 56th place on a global scale, as economic crisis saw an increase in bribery and illegal transactions.

In the meantime, a range of food and beverages industry players have been reporting poor financial results. Latvia's leading confectionery company Laima posted a 230% dip in full-year 2008 net income, despite a 2.6% year-on-year (y-o-y) increase. The firm is aiming to maintain flat turnover in 2009 and pursue further export opportunities. Similarly, the leading mass grocery retail (MGR) operator, Rimi Baltic, reported a 5.9% y-o-y drop in H109 sales in the Baltics as a whole, with Latvian operations posting a 6.5% y-o-y decrease. Earlier in the year, Rimi had played down suggestions that it would trim its store hours in Latvia (as had already been done in Estonia), in response to weakening demand, as the global financial meltdown brings the region to its knees. However, Rimi's near-term performance will be shaped by the rising importance of its SuperNetto discount banner and thus thinning margins.

On the other hand, Latvian consumers seem to have developed more of a taste for foreign-made foods and beverages. The Latvian State Revenue Service recently reported that locally produced beers meet 81% of domestic demand, with the figure lower by 10% to the level recorded in H108. Similarly, imports of UKmade foods and non-alcoholic beverages rose by 51% y-o-y to GBP8.6mn in 2008, and would have been even higher had alcoholic drinks been included. This shift in consumer behaviour is being explored with deals such as the agreement between UK-based spirits maker William Grant and leading Russian spirits producer and distributor SPI Group to distribute Grant’s core brands across the Baltic countries, as well as the Estonian Altia/Spanish Grupo Codorníu partnership to distribute the latter’s still and sparkling wine brands in Latvia and Estonia, among other regional markets.

A number of risks to the performance of Latvia’s food and drinks market remain, not least the possibility of currency devaluation. The country, positioned as the weakest economy in the Baltic region, is expected to post double-digit contractions through the remainder of the year, as the economy remains in recession through to later in 2010. Retail sales in Q209 (perhaps the most important indicator given Latvia's consumer-dominated economic model) shrank 25.2% y-o-y, having fallen 22.5% in Q109. SHOW LESS READ MORE >

Executive Summary
SWOT Analysis
Latvia Food Industry SWOT
Latvia Drink Industry SWOT
Latvia Mass Grocery Retail Industry SWOT

Business Environment
Core Global Industry Views
Core Views For The Food & Drink Industry
Regional Food & Drink Business Environment Ratings
Table: Emerging Europe Food & Drink Business Environment Ratings Q1 2010
Latvia’s Food and Drink Business Environment Rating
Macroeconomic Outlook
Table: Latvia – Economic Activity

Food
Industry Forecast Scenario
Food Consumption
Table: Latvia – Food Consumption Indicators – Historical Data & Forecasts
Confectionery
Table: Latvia – Confectionery Consumption Indicators – Historical Data & Forecasts
Trade
Table: Latvia – Food & Drink Export, Import And Balance Value (US$mn) – Historical Data And Forecasts
Industry Developments
Market Overview
Food Consumption
Food Processing
Leading Food Producers
Table: Structure of Manufacturing in Latvia, 2005*
Confectionery
Trade
Agriculture
Dairy Industry

Drink
Industry Forecast Scenario
Alcoholic Drinks
Table: Latvia – Alcoholic Drinks Consumption Indicators – Historical Data & Forecasts
Soft Drinks
Table: Latvia – Soft Drinks Consumption Indicators – Historical Data & Forecasts
Industry Developments
Market Overview
Alcoholic Drinks
Beer
Spirits
Wine
Soft Drinks
Hot Drinks

Mass Grocery Retail
Industry Forecast Scenario
Table: Latvia – Mass Grocery Retail Value Sales By Format – Historical Data & Forecasts
Table: Latvia - Grocery Retail Sales By Format – Historical Data And Forecasts
Industry Developments
Market Overview
Leading Retailers
Table: Structure of Latvia's Mass Grocery Retail Market by Estimated Number of Outlets
Table: Structure of Latvia's Mass Grocery Retail Market (US$mn) – Sales Value by Format
Table: Structure of Latvia's Mass Grocery Retail Market (LVLmn) – Sales Value by Format
Table: Latvia – Average Annual Sales Per Outlet By Format, 2008

Competitive Landscape
Key Players
Food & Drink
Table: Key Players in Latvia's Food & Drink Sector (2009)
Mass Grocery Retail
Table: Key Players in Latvia’s Mass Grocery Retail Sector (2009)
Company Analysis
Food
Paulig Baltic AS
Laima
Margota (Balbiino)
Drink
Livu Alus
Aldaris
Cesu Alus
Cido Grupa
Latvijas Balzams
Agriculture
Rigas Piena Kombinats (RPK)
Mass Grocery Retail
Maxima LT (formerly Vilniaus Prekyba)
Rimi Baltic
Elvi

Appendix

Country Snapshot: Latvia Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
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

Food & Drink Industry Glossary
Food & Drink
Mass Grocery Retail

Food & Drink Forecasting & Sourcing
How We Generate Our Industry Forecasts
Sourcing

- Paulig Baltic AS
- Laima
- Margota (Balbiino)
- Livu Alus
- Aldaris
- Cesu Alus
- Cido Grupa
- Latvijas Balzams
- Rigas Piena Kombinats (RPK)
- Maxima LT (formerly Vilniaus Prekyba)
- Rimi Baltic
- Elvi