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Czech Republic Food and Drink Report Q2 2011
Business Monitor International, Feb 2011, Pages: 83
The Czech Republic 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 Czech Republic's food and drink industry.
While 2010 was expected to mark the return to positive economic growth, following a 4.1% GDP contraction in 2009, growth was relatively weak. The current year will remain a challenging one from the consumer spending perspective, as high levels of unemployment are compounded by the continued need for prudence in state expenditure. We therefore expect modest value growth across the Czech food and drinks as well as mass grocery retail (MGR) industries, as the trend of premiumisation remains on hold for the most part, at least in the short term. The longer term prospects are also clouded by the lack of a vibrant demographic outlook.
Headline Industry Data (local currency):
- 2011 per capita food consumption = 2.98%; forecast to 2015 = 18.04%
- 2011 beer volume sales = -0.02%; forecast to 2015 = -0.77%
- 2011 mass grocery retail sales = +4.99%; forecast to 2015 = 34.52%
Key Company Trends:
Czech Beer Industry Continues To Struggle – Individual companies have been reporting a decline in their volume sales throughout the past year, as both domestic consumption and exports declined under impact of the recession. The decline has also been evident at the industry level. Beer production in the Czech Republic registered a 10% year-on-year (y-o-y) drop in H110, according to figures released by the Czech Beer and Malt Association. The union is now warning that the industry has fallen on hard times, as the effect of increased taxes is compounded by the fall in consumption and a rise in barley prices. It claims these market conditions are the worst for more than two decades.
New MGR Players Emerging – In December 2010, Cesky Grunt, a new retail chain, reported it will open new stores in the Czech Republic following the launch of its first test store in Prague in June 2010. The food retailer will offer products manufactured by farmers and food producers locally to highlight fresh and high quality foods in the country. The company is looking for growth momentum through its business expansion in the popular farmer markets held across the country. The firm is likely to launch more stores in various Czech regions over three to five years, with its network developed on a franchise basis.
Key Risks to Outlook:
External Demand Risk Compounded By Continued Need For Austerities – While the outlook for spending is expected to pick up in 2011, an anticipated cooling in external demand could bite into the recovery of the consumer sector and wider economy, with private consumption not ready to take on the growth baton from exports and manufacturing. The ongoing implementation of fiscal austerity measures could also affect any recovery in the labour market and, as a result, the unemployment rate.
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