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Venezuela Food and Drink Report Q3 2010
Business Monitor International, June 2010, Pages: 68
Our short-term outlook for food and drink spending in Venezuela is poor. Unlike many of its regional peers Venezuela is struggling to escape from recession and we are forecasting an economic contraction of 3.8% in 2010 on the back of a decline of 3.3% in 2009. One of the most conspicuous symptoms of Venezuela's economic malaise is the persistence of fierce inflationary pressures. This is reflected in our US dollar consumption forecasts, with the value of the Venezuelan bolivar expected to depreciate significantly over the next five years. In an attempt to control the problem the government has nationalised large parts of the domestic food and drink industry.
- 2010 per capita food consumption (US$) = -40%; forecast to 2014 = -33%
- 2010 alcoholic drink sales (US$) = -46%; forecast to 2014 = -76%
- 2010 soft drink sales (US$) = -44%; forecast to 2014 = -47%
- 2010 mass grocery retail sales (US$) = -41%; forecast to 2014 = -37%
Key Macroeconomic Data
- 2010 Real GDP growth = -3.8% (2009, -3.3%)
- 2010 Consumer Price Index = +34% chg y-o-y (period average) (2009, +29%)
- 2010 Unemployment Rate = 9.5% (end of period) (2009, 8.8%)
Key Company Trends and Developments
Risk of appropriation – Over the last few months the Venezuelan government of Hugo Chávez has taken more steps towards nationalising the country’s food industry with decrees to seize assets belonging to Mexico-based Gruma and Venezuela-based Empresas Polar. The risk of appropriation is a major threat to all food and drink firms operating in Venezuela and partly explains why the country languishes in bottom position in our Latin American Food and Drink Business Environment Ratings. Nationalisation of retail industry – In February 2010, France-based Casino sold its 80% stake in Venezuelan retailer Cativen to the government. The takeover of Cativen’s six Exito hypermarkets represents the first time the government has turned its attention to the retail sector and other retailers in the country must now be concerned that such moves may represent the start of a trend.
Key Risks to Outlook
Possible upside risk – The dire economic environment could hold positives in the longer term, with a fall in the popularity for President Chávez meaning that an alternative candidate could emerge victorious in the 2012 elections. The election of a new leader with a mandate to reverse Chávez's disastrous economic policies could harness the country's significant economic potential and put it on course to become one of the leading consumer growth stories in the region.
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