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Croatia Food and Drink Report Q1 2011
Business Monitor International, Nov 2010, Pages: 87
The 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.
Given that the Croatian economic recovery remains weak – also causing a political dissatisfaction we hold to our guarded expectations for Croatia’s short-term outlook for its food and drinks market. Inflation is also expected to come in at a low 0.5% in the current year, which will have a dampening effect on top-line market figures. In the meantime, the Croatian unemployment rate moderated slightly, to 16.4% in July 2010, although the drop in the jobless rate is likely to have been caused by the onset of the tourism season. As a result, we contend that the outlook for employment prospects in Croatia is by no means positive at this juncture and we hold to our forecast for the jobless rate to only moderate to 16.0% by end-year, which also bodes poorly in terms of availability of consumer finances for premium food and drinks products.
Headline Industry Data:
- 2010 per capita food consumption = +0.58%; forecast to 2015 = +10.16%
- 2010 alcoholic drinks sales = +1.69%; forecast to 2015 = +13.87%
- 2010 soft drinks sales = +0.50%; forecast to 2015 = +8.76%
- 2010 mass grocery retail = +1.92%; forecast to 2015 = +31.30%
Key Company Trends:
Continued Consolidation in Food and Drink – Having recently acquired leading Slovenian food conglomerate Droga Kolinska in October 2010, Croatian Atlantic Grupa completed the purchase of the spring and mineral water producing and distributing arm of compatriot wine and spirits producer Badel 1862. The Kalnicke Vode Bio Natura company, worth some EUR11.23mn, was sold by Badel due to its financial struggles and the need for rationalisation. The water business will be integrated into Atlantic Grupa’s Health and Wellbeing arm, which includes the Cedevita GO! product, created at the cost of HRK70mn. Kalnicke Vode Bio Natura posted sales of HRK506mn in 2009.
Key Risks to Outlook:
Lack of Political Support – Further exacerbating our challenging consumer view of Croatia are the data released by news agency Mediana Fides and Globus Magazine in September 2010, which show that 62.2% of Croatians do not support Prime Minister Jadranka Kosor's leadership, with Minister of Finance Ivan Suker even less popular. The government's unpopularity reflects the ongoing tough conditions in the domestic economy, which are unlikely to moderate significantly in the coming 12 months, posing risks to the government's ability to secure re-election in 2011 and thus to a wider operating environment for both domestic and foreign companies involved in the Croatia’s food and drink and MGR industries.
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