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Slovakia Food and Drink Report Q2 2010
Business Monitor International, March 2010, Pages: 77
The Slovakia 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 Slovakia's food and drink industry.
Over the past decade, the Slovak food market developed and matured rapidly, shaped by political and economic reforms in the late 1990s as well as the subsequent accession into the EU and the eurozone. However, as a small market (of around 5.4mn people) in close proximity to large food-exporting countries such as the Czech Republic, Poland and Germany, slow-recovering Slovakia will struggle to maintain its domestic food industry against the tide of frequently cheaper imports from other, more recent EU entrants. Overall, we see Slovakia slipping further down the Business Environment Ratings (BER) matrix for the emerging Europe region. The country is now placed fifth out of the 15 major markets, having been ranked third recently.
Slovakia’s food consumption is estimated to have posted a very modest year-on-year (y-o-y) increase in 2009 of under 2% in local currency. In value terms, food consumption is expected to reach EUR5.37bn (US$6.77bn) by 2014, growing by some 14.74%. it will continue to lag behind the neighbouring Czech Republic (with a forecast five-year growth of over 23%) and suffer from the impact of the economic downturn, which, among other consequences, resulted in falling prices of foods and beverages. The coming two years are also expected to witness low single-digit value growth of food consumption, as consumer confidence is slow to return to its pre-crisis levels and new retail outlets shrink in numbers. The Slovakian beer market, already flagging over the past few years, is seen as showing little longer-term promise. At the start of February, beer giant SABMiller, the number two player behind Heineken, shut its Pivovary Topvar brewery in Slovakia and shifted brewing operations to its other local unit, Pivovary Saris. Although SABMiller’s consolidation should strengthen Heineken, the latter is unlikely to firm up spending in Slovakia any time soon. Even though modest per capita consumption gains are likely over the long term, Heineken will probably have to rely on premiumisation to drive sales in the county.
In the meantime, the economic downturn, through factors such as a consumer shift towards discount and private label goods, price wars and falling grocery prices, had a major effect on mass grocery retail (MGR) sales. Slovakia-based market research company Terno reported that the top 10 domestic retailers (including non-food companies) posted a revenue decline in 2009, following years of strong growth. Consequently, the companies are expected to decelerate their organic expansion over the course of 2010. UK-based retailer Tesco (the leading foreign retailer in the country, with a 15% share) is planning to launch 15 new outlets. Meanwhile, COOP Jednota, Billa and Kaufland aim to open 40, six and 12 new retail stores respectively, with numbers falling below the levels witnessed in previous years, which will also impact overall food and beverages value and volume sales in the country.
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