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Romania Food and Drink Report Q2 2010
Business Monitor International, March 2010, Pages: 89
Business Monitor International's Romania 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 Romania's food and drink industry.
Having been negatively impacted by the economic downturn – with a year-on-year (y-o-y) value decline estimated for 2009 – BMI forecasts that food consumption in Romania will rise by just 8.23% in local currency terms between 2009 and 2014 (in contrast to 23% expected for the Czech Republic, for example, as well as almost 14% for Bulgaria). In 2014, the value of food consumption will reach ROL60.12bn (US$20.61bn), up from an estimated ROL55.54bn (US$20.12bn) in 2009. Nevertheless, food consumption as a percentage of GDP is expected to decrease to 8.74% by 2014, from an estimated 12.35% in 2009 (a 12% increase on 2008 levels), reflecting economic recovery and an increase in spending on durables that was previously constrained by lack of disposable income.
Nevertheless, in BMI’s Food and Drink Business Environment Ratings table for Q210, Romania again places ninth out of the 15 key markets surveyed in the emerging Europe region. Economic factors will conspire to pose challenges to the development of Romania’s food consumption volumes, not least because the money sent back home by some of its citizens working in Western Europe is also under question, as the eurozone only slowly recovers from recession. The country’s food and drinks market will continue to be shaped by low per capita incomes, large sections of rural population that have few opportunities for modern retail shopping as well as the announced expansion of discount mass grocery retail (MGR) outlets and private label brands. In fact, a number of beverage producers recently reported underwhelming financial performance. For example, in November 2009, emerging Europe-focused Coca-Cola anchor bottler Coca-Cola Hellenic (CCH) reported a 3% y-o-y slip in third quarter (three months to September 30 2009) earnings.
Central and Eastern Europe (CEE), where trading conditions were particularly difficult in 2009 but which accounts for more than 45% of its sales, had a major negative impact on the company’s bottom line. Similarly, SABMiller, one of the leading global brewers, reported that its lager volumes in Europe fell by 6% y-o-y in H109. Russia and Romania particularly suffered the effects of the adverse economic climate. In the meantime, Romanian fruit and vegetable growers are certain to welcome the news that the European Commission recently approved a new programme – Romconsery – which is 50%-funded by the EU and which should considerably increase exports of Romanian produce. In the first ten months of 2009, Romanian producers only exported 5% of the local produce (around 10,000 tonnes). According to Romconsery estimates, by 2012, exports are expected to account for as much as 50% of local production of fruit and vegetables. Some of the key targets of the programme, which came into effect at the start of 2010 and which will be supported by promotional and marketing initiatives, are retailers in Ukraine, Russia and Norway.
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