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Croatia Food and Drink Report Q4 2010
Business Monitor International, Aug 2010, Pages: 86
Croatia 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 Croatia's food and drink industry.
Industry View
Our expectations for Croatia’s short-term outlook for its food and drinks market is relatively guarded, given the challenging economic environment, including the high unemployment rate and weakened consumer confidence. While some recovery of annual growth levels are expected in the medium-to-longer term, they will fall short of those recorded pre-recession, with the Croatian consumer increasingly becoming fond of private label items. From the mass grocery retail (MGR) perspective, the Croatian market will fail to attract major foreign direct investment (FDI) programmes, which will further serve to hamper the development of the country’s food and beverages consumption values.
Headline Industry Data
2010 per capita food consumption = +0.6%; forecast to 2014 = +8.4%
2010 alcoholic drinks sales = +1.4%; forecast to 2014 = +12.3%
2010 soft drinks sales = +0.5%; forecast to 2014 = +7.3%
2010 mass grocery retail = +3.2%; forecast to 2014 = +23.7%
Key Company Trends
Consolidation in Food and Drink – The key company event in the past month was the acquisition agreement struck between Croatian functional food and drink producer and distributor, Atlantic Grupa and Slovenian food company Droga Kolinska. The former, which is poised to acquire the latter for EUR382mn (subject to regulatory approval), would create one of the region's largest food and drink firms by annual sales. Although tactical product synergies with Atlantic's core functional food and drink products are probably lacking, acquiring Droga would open up routes to the hot drinks and snack food industries in particular. Atlantic is also poised to pursue promising organic growth projects in 2010, with the Czech Republic and Slovakia likely to be targeted.
Key Risks to Outlook
Croatia’s Flagging Investment Potential – Having been placed 24th in 2009, according to A.T.Kearney’s recently published Global Retail Development Index (GRDI) for 2010, Croatia has been pushed out of the top 30 most attractive retail investment destinations for global chains. Additionally, private labels were reported by market research agency GfK to account for a growing share of the total market (or for 19.4% of the food market). If this trend persists – despite the benefits provided by the eventual EU membership – our forecasts will be adjusted accordingly, as the above factors will have a negative impact on the value of consumer spending.
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