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Belarus Food and Drink Report Q2 2010
Business Monitor International, March 2010, Pages: 45
The Belarus 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 Belarus' food and drink industry.
Despite the country’s reputation as a poor place to do business, Belarus has attracted interest and investments from a number of international major players in recent months as discussed in this recently published Belarus Food & Drink Report for Q210. Unlike most of its neighbouring countries, Belarus is looking likely to have avoided a deep recession in 2009. That said, we hold that economic conditions in the country remain precarious, with demand only having been supported by significant government intervention. Indeed, the government’s roll in the economy continues to be pervasive. However, ongoing reforms to the business environment are making Belarus an increasingly appealing investment destination, with several firms already present in the market looking to ramp up their investments.
While the country’s mass grocer retail (MGR) sector remains grossly underdeveloped with independent grocers accounting for the majority of sales, there are signs that this is slowly changing. Modern outlets are growing in popularity, particularly with the more affluent, if still very small, middle class. In November 2009 the European Bank for Reconstruction and Development (EBRD) acquired a stake of 25.5% in domestic firm West Ost Union Commercial Industrial Group (WOU) which runs the Buslik supermarket chain in the country. Founded in 2006 it runs a chain of 12 modern supermarkets specialising in children’s goods. The EBRD investment will provide the retailer with working capital, vital for its planned expansions of 25 stores by 2013. While the EBRD has previously invested in the country’s drink sector, this is its first investment in the retail sectors. The EBRD views retail commerce as vital to the development of a successful market economy, with such investments providing essential funds for its development.
Another international major which has expressed interest in increasing its investments in Belarus is global soft drink and snack food giant PepsiCo. In November 2009 the firm said that it plans to launch several new programmes in Belarus, including an agricultural one. PepsiCo is looking to stimulate the Belarusian agribusiness sector by partnering with farmers and investing in their technological development. PepsiCo has already launched a similar programme in Russia through which around 250,000 tonnes of potatoes are cultivated annually using the firm’s aid. These potatoes are then purchased by Frito-Lay, PepsiCo’s salty snacks division. Through this programme farmers are supplied with quality seeds, harvesters and climate controlled warehouses for vegetable storage, as well as micro loans and consulting aid from experts. The agricultural sector in Belarus still consists largely of state-run collective farms, which are generally speaking, inefficient. Soil depletion is a major problem, owing to a severe lack of equipment and fertiliser shortage, with many farmers still relying on horse-drawn ploughs. Therefore, such investments by the likes of PepsiCo are vital if the sector is to develop and raise the country’s export potential. While Belarus still has a long way to go in terms of developing its food and drink sector, such investments are a very important step in the right direction.
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