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Croatia Food and Drink Report Q2 2011
Business Monitor International, Feb 2011, Pages: 86
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.
Croatia is currently our least favourite market in the latest version of the regional matrix ranking companies’ attractiveness to food and drinks players. A combination of the small population, low per capita spending levels and fairly subdued long-term outlooks suggest that it will be difficult for Croatia to improve its regional position. Consumer outlook remains challenged by the anaemic economic recovery and elevated unemployment rates, which have all but halted the trend of premiumisation. On the other hand, some respite should be provided by the country’s expected accession into the EU.
Headline Industry Data (local currency):
- 2011 per capita food consumption = 1.31%; forecast to 2015 = +10.16%
- 2011 alcoholic drinks sales = +0.95%; forecast to 2015 = +13.99%
- 2011 soft drinks sales = +0.90%; forecast to 2015 = +8.77%
- 2011 mass grocery retail = +3.40%; forecast to 2015 = +33.70%
Key Company Trends:
Leading Players Ride Out the Storm – Despite a challenging economic environment, leading Croatian food manufacturer Agrokor anticipates achieving 10% year-on-year growth in revenue, following a focus on its core businesses. Agrokor has by and large been able to maintain market share across its core brands, also given benefits of scale and its direct involvement in the mass grocery retail (MGR) market. In the meantime, fresh from the acquisition of leading Slovenian food conglomerate Droga Kolinska and the spring and mineral water producing and distributing arm of compatriot wine and spirits producer Badel 1862, Croatian Atlantic Grupa reported that it will start distributing Red Bull energy drink products in the country, further increasing the number of foreign brands in which it deals.
Key Risks to Outlook:
Timing of the Membership of the EU – Croatia has yet to even start considering some of the requirements of its bid to join the EU. With judicial reform and anti-corruption also still on the list, we continue to see 2013 as the likely earliest year of accession. However, while this will bring benefits in terms of ease of doing business, the coming two years could also see Croatia further slip in terms of attractiveness to foreign direct investment, which is increasingly seeking more promising (from a longer-term perspective) emerging markets and is thus unlikely to improve consumer sentiment in Croatia. In the meantime, ratings agency Standard & Poor's recently downgraded Croatia's long-term sovereign credit rating to BBB-, one step above junk. We are forecasting real GDP growth of 1.8% in 2011 and 1.9% in 2012, although this is at risk from external factors, as well as due to the ongoing corruption investigations into the highest levels of authority.
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