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Greece Food and Drink Report Q2 2011
Business Monitor International, Feb 2011, Pages: 78
Business Monitor International's Greece 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 Greece's food and drink industry.
Greece remains rooted to the bottom of BMI's Western Europe Food and Drink Risk/Reward ratings, weighed down by the country’s dire fiscal situation. With the country having to contend with the hardesthitting austerity package anywhere in Europe, following a financial support package from the IMF and the European Central Bank, we see little prospect of consumption growth during our forecast period. An ongoing trend towards cheaper options and a move towards private labels are likely to become ingrained in the Greek psyche and be accompanied by a reduction in the consumption of discretionary items such as soft drinks, confectionery and alcoholic drinks. This operating environment offers up opportunities for producers in the private label sector, as well as in the discount retail sector.
Headline Industry Data
2010 per capita food consumption = -1.1%; forecast to 2015 = 0.9%
2010 alcoholic drink sales = -1.1%; forecast to 2015 = 0.7%
2010 soft drink sales = -1.1% ; forecast to 2015 = 4.1%
2010 mass grocery retail sales = -0.1%; forecast to 2015 = 5.8% Key Company Trends
Coca-Cola Hellenic Continues To Pursue International Growth - As a reflection of the subdued state of the domestic Greek market, the country's largest soft drink operator, Coca-Cola Hellenic has continued to invest heavily overseas. In December 2010, the firm signalled its intention to push further into Africa by bidding for the remaining shares in the Nigerian Bottling Company that it does not already own. The firm, which already owns 66.4% of the African bottler, offered EUR94mn (US$124mn) for the outstanding shares. It is thought the deal should be completed by Q311, provided it is approved by the Nigerian Bottling Company's board.
BMI Sees Potential In Sector In Discount Sector As Lidl Buys Aldi Outlets - Our optimistic outlook for the discount sector was cemented in January 2011 when Lidl announced it was looking to purchase 10 former Aldi outlets. We believe this underlines the fact that with the right offering and store the discount sector will prove very successful during the current period of austerity. Discount giant Aldi had announced it was to exit the Greek market after struggling to build up sufficient scale to operate a viable business. However, rival discount operator Lidl has so far not shown any signs of giving up on the market and BMI believes the sector still offers significant potential.
Key Risks To Outlook Government default - The risks to our outlook are weighted to the downside as we still believe a default is the likely conclusion to Greece’s fiscal problems. Greece’s liabilities are far in excess of its ability to pay and we believe the latest financial support pledges will only push back the recognition of liabilities to a future date. Ultimately, we believe the only options available to Greece are outright default, debt restructuring or a direct transfer of liabilities to eurozone states. The latter two options would still represent a technical default since the government would renege on the original terms of its bond contracts. However, either would clearly be preferable to a full-scale default, which could have very severe consequences for every part of the Greek economy and the EU.
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