Germany Food and Drink Report Q4 2010

Business Monitor International, August 2010, Pages: 73

Germany 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 Germany's food and drink industry.

German consumers are characterised by high saving rates and extreme price sensitivity. In 2006 and 2007 there were signs this could start to change, as demand for Germany's technologically advanced exports in rapidly industrialising emerging markets pushed the country's rate of GDP growth much higher than the recent average; this economic performance fed into consumer confidence and pushed up spending. However, this was short lived, as the global financial crisis led to a significant slowdown in the German economy, which damaged confidence and curtailed consumption. We expect economic growth to reach 2.0% in 2010, but in line with our global outlook forecast growth remaining fairly muted from 2011 onwards. We therefore see only modest growth in consumption going forward, with the German consumer to remain scarred by the recent economic turbulence and price sensitivity to remain in evidence throughout our forecast period.

Headline Industry Data

- 2010 per capita food consumption = +2.3%; forecast to 2014 = +14.5%
- 2010 alcoholic drink sales = -0.1%; forecast to 2014 = +2.3%
- 2010 soft drink sales = +1.7% ; forecast to 2014 = +10.3%
- 2010 mass grocery retail sales = +3.0%; forecast to 2014 = +22%

Key Company Trends

More retailers embracing private labels – At the end of 2009 German wholesaler Metro Cash & Carry unveiled a revamped private label range as it seeks to adjust its offering in response to the downturn. Currently 40% of the market is accounted for by private labels. However, this is largely down to the success of the discount format and while large retailers in other European countries have for a long time capitalised on the strength of their brand, this strategy has only just been embraced in Germany. Consolidation in Beer – The German Federal Statistical Office (Destatis) has reported that beer sales in Germany totalled 100mn hectolitres (hl) in 2009. The figure was down by 2.9mn hl from the previous year, a fall of 2.8%. We envisage strong pressure towards further consolidation. The head of marketing at Krombacher Brauerei, which produces Germany’s bestselling lager, said in an interview that it estimated that overcapacity in the sector was at 30%. With consumption falling, an increasing number of producers will eventually be squeezed out.

Key Risks to Outlook

Slowdown in China – As an export driven economy the major risk to our German outlook is the prospect of a more intense slowdown in China than we are currently forecasting. Chinese demand for Germany's exports have helped drive the country's recovery in 2010. However, overly accommodative fiscal and monetary stimuli in China have led to an overheating that could result in a sharp withdrawal in 2011. Even if China manages to avoid this scenario, we are projecting a slowdown in Chinese import levels towards the latter stages of 2010, as Beijing recognises the need to rebalance the economy towards domestic consumption.

Eurozone debt crisis – A second risk is the prospect of further instability in the eurozone as a result of the unsustainable debt levels built up by some member countries. However, this brings with it the prospect of further weakening of the euro which, given Germany's export orientated economy, would not be entirely unfavourable to German economic growth and to our consumption expectations.

Executive Summary
SWOT Analysis
Germany Food Industry SWOT
Germany Drink Industry SWOT
Germany Mass Grocery Retail Industry SWOT
Business Environment
Core Global Industry Views
Table: BMI Food & Drink Core Views
Western Europe Food & Drink Business Environment Ratings
Table: Western Europe Food & Drink Risk/Reward Ratings Q4 2010
Germany Food & Drink Business Environment Rating
Macroeconomic Outlook
Germany – GDP By Expenditure
Industry Forecast Scenario
Consumer Outlook
Food
Total Food Consumption
Table: Germany Food Consumption Indicators – Historical Data & Forecasts
Confectionery
Table: Confectionery Value/Volume Sales - Historical Data & Forecasts
Drink
Soft Drinks And Bottled Water
Table: Soft Drink Value Sales - Historical Data & Forecasts
Alcoholic Drinks
Table: Alcoholic Drink Value/Volume Sales - Historical Data & Forecasts
Hot Drinks
Table: Hot Drink Value Sales - Historical Data & Forecasts
Mass Grocery Retail
Table: Germany MGR Sector - Sales Value by Format - Historical Data & Forecasts
Trade
Food
Industry Trends And Developments
More Retailers Embracing Private Labels
Organic Sector Resilient
Market Overview
Food Sector
Prepared Food
Organic
Dairy
Drink
Industry Trends And Developments
Domestic Wine Demand Resilient
Falling Beer Demand Driving Consolidation
Market Overview
Soft Drinks
Alcoholic Drinks
Mass Grocery Retail
Industry Trends And Developments
Expansion Across Sectors To Hedge Bets
Metro Searching For EM Growth, Could Be Split Up?
Market Overview
Table: Structure of Germany's Mass Grocery Retail Market by Estimated Number of Outlets
Table: Sales Format by Value in Germany's Mass Grocery Retail Market (US$bn)
Table: Sales Format by Value in Germany's Mass Grocery Retail Market (EURbn)
Table: Annual Average Sales per Outlet by Format
Competitive Landscape
Table: Key Players in Germany's Food Sector (2008)
Table: Key Players in Germany's Drink Sector (2008)
Table: Key Players in Germany's Mass Grocery Retail Sector
Company Analysis
Food
Oetker Group
Nordmilch Group
Haribo
Lieken Group (Barilla)
Drink
Emig GmbH & Co KG (GerberEmig Group)
Radeberger Group (Oetker Group)
Anheuser-Busch InBev Germany
Mass Grocery Retail
Lidl Group
Rewe Group
Appendix
Country Snapshot: Germany Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Manufacturing Wages
Methodology
Food & Drink Business Environment Ratings
Ratings Methodology
Ratings Overview
Ratings System
Indicators
Table: Limits Of Potential Returns
Table: Risks To Realisation Of Potential Returns
Weighting
Table: Weighting
Food & Drink Industry Glossary
Food & Drink
Mass Grocery Retail
Food & Drink Forecasting And Sourcing
How We Generate Our Industry Forecasts
Sourcing

- Oetker Group
- Nordmilch Group
- Haribo
- Lieken Group
- Emig GmbH & Co KG
- Radeberger Group (Oetker Group)
- Anheuser-Busch InBev Germany
- Lidl Group
- Rewe Group

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