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Romania Food and Drink Report Q1 2011
Business Monitor International, Nov 2010, Pages: 94
Romania 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 Romania's food and drink industry.
Romania remains one of the least attractive food and drink investment markets in the emerging Europe region, placing tenth out of the 15 countries surveyed in our latest Food and Drink Business Environment Ratings (BER) table for Q111. While we remain very optimistic about the country’s prospects in the longer term, a challenging economic environment, including elevated unemployment levels, will hamper the decided return of consumer confidence and the trend of premiumisation evident prior to the downturn. Additionally, the country’s food and drinks market will continue to be shaped by low per capita incomes and large sections of the rural population having few opportunities for modern retail shopping.
Headline Industry Data (local currency)
- 2010 per capita food consumption = +1.59%; forecast to 2015 = +9.28%
- 2010 alcoholic drinks sales = +0.97%; forecast to 2015 = +20.48%
- 2010 soft drinks sales = +4.29%; forecast to 2015 = +23.34%
- 2010 mass grocery retail = -5.68%; forecast to 2015 = +43.68%
Key Company Trends
Mass Grocery Retail (MGR) Players Targeting Longer-Term Opportunities – According to Ziarul Financial reports from October 2010, hypermarkets will expand in 2011, even though the return of consumer confidence has been barely noticeable. Even though the number of new hypermarkets will be only half of that in 2007 and 2008, 2011 will represent a move forward, as no new hypermarkets are reported to have opened in Romania in the course of 2010. French retail giant Carrefour is treading carefully in regards to hypermarkets, but was planning to launch two new supermarkets in Romania before the end of 2010. Romania-based salami and sausage manufacturer CrisTim was reported to be planning to open 60 more convenience stores by end-2010, having already opened 33 by August 2010. Similarly, Penny Market, a Czech-based discount chain owned by German discounter Rewe, was reported in September 2010 to be undertaking an investment of EUR15mn (US$19.4mn) to launch 10 new outlets in Romania by end-2010.
Key Risks to Outlook
Fiscal Austerities to Prove Challenging – The major risk to consumer outlook in Romania is the state of its economy. Romania faces a tough road of fiscal consolidation through the coming quarters, as the government implements drastic austerity in an attempt to correct its budgetary overspend. However, this will also further depress already damaged consumer confidence, especially as the leu fails to appreciate and as inflation is expected to top 8% for the whole of 2010, making real wages stretched even further.
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