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Ukraine Food and Drink Report Q1 2011
Business Monitor International, Dec 2010, Pages: 87
The Ukraine 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 Ukraine's food and drink industry.
While Ukraine’s large population of around 46mn indicates a considerable potential of its food and drink market, high inflation, a fragile economic and political situation, as well as regulatory shortcomings will continue to hamper its development. The country’s short-term external, economic growth and financial outlooks are particularly poor. Therefore, any potential gains of operating in Ukraine must be considered against a background of high risks, especially over the near term. For 2010, we projected a per capita food consumption increase of 6%, largely driven by high inflation levels.
Headline Industry Data (local currency):
2010 per capita food consumption = +6.1%; forecast to 2015 = +40.1%
2010 alcoholic drinks sales = +3.5%; forecast to 2015 = +36.6%
2010 soft drinks sales = +4.9%; forecast to 2015 = +47.0%
2010 mass grocery retail = +6.8%; forecast to 2015 = +53.0%
Key Company Trends
The Ukrainian Beer Market is Expected to Remain Subdued – According to September 2010 statements by Peter Chernyshov, chief executive of Danish brewer Carlsberg's Ukrainian brewery Slavutich, the Ukrainian beer market has experienced a revival and is expected to post modest growth in 2010. The demand for Carlsberg's beer remained limited after the company raised beer prices in order to counter steep hikes in the local beer excise tax. Carlsberg had reportedly been considering investing in a new brewing facility in Ukraine through its local unit, but no investment seems to have materialised to date, given the subdued outlook for the beer industry.
Key Risks to Outlook
Economic Recovery is Far From Assured – The outlook for the Ukrainian economy through 2011 remains relatively weak, with export growth set to slow and private consumption likely to post only a modest recovery. Consumers are struggling under the weight of higher inflation and recently increased costs of fuel, making their purchases decidedly price-based. We also hold to our forecast for a slowdown in growth to 3.4%, following an expected 3.8% outturn this year. From 2012 the outlook is better, although this relies on the government successfully implementing fiscal austerity measures and continued recovery in the banking sector.
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