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Belarus Food and Drink Report Q1 2011
Business Monitor International, Dec 2010, Pages: 53
The Belarus 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 Belarus's food and drink industry.
The Belarusian food industry is regarded to have strong long-term potential, which will be boosted by gradual economic liberalisation and the country’s integration into wider European trading networks. The government is also increasingly aiming to attract foreign direct investment (FDI), which should provide dynamism for domestic food and beverages manufacturing. In the short-term, however, elevated inflation and unemployment levels remain an issue, forcing consumers to make careful decisions regarding discretionary spending. The premiumisation trend is on hold, by and large, although the capital city Minsk has a considerably more dynamic short-term outlook.
Headline Industry Data (local currency):
2010 food consumption = +6.44%; forecast to 2015 = +73.53%
2010 per capita food consumption = +6.60%; forecast to 2015 = +77.22%
2010 alcoholic drinks sales = +6.99%; forecast to 2015 = +68.14%
2010 per capita alcoholic drinks sales = +7.15%; forecast to 2015 = +71.72%
Key Company Trends
Foreign companies continue to invest in Belarus: Eyeing longer-term market potential and also taking advantage of lower production costs, foreign companies have continued to invest in the Ukrainian alcoholic beverages industry, also having a knock-on effect in Belarus. In November 2010, Ukrainian vodka producer Nemiroff began production in Belarus. Nemiroff’s decision was, however, reportedly due at least in part to the country's strict rules on importing alcohol. The firm claims the distillery in Minsk, which will produce five of its vodka brands, has an annual production capacity of 10mn litres.
Key Risks To Outlook
The state will be slow to relinquish power over economy: We caution that the state will retain a large role in the Belarusian economy and will continue to eschew meaningful political pluralism. This in turn will hinder the efficiency of the market, and elevate domestic political risks, which may hinder higher levels of FDI inflows. It will also prevent Minsk from moving to the level of close relationship with the European Union (EU) that a number of more successfully democratised former Soviet states have achieved. Given that the consumer outlook is intrinsically tied into the wider political environment, it is clear that Belarusian consumers will continue to spend below their ultimate potential, both in terms of quantity and with regard to the quality of goods that they choose to buy.
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