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Bulgaria Food and Drink Report Q3 2011
Business Monitor International, June 2011, Pages: 94
Bulgaria 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 Bulgaria's food and drink industry.
Bulgaria has marginally improved its position within the Central and Eastern Europe (CEE) Business Environment Ratings (BER) for Q311, now ranking 12th instead of 13th, out of the 15 key regional markets. However, we expect Bulgaria to remain one of the regional underperformers, dragged down by factors such as its low and declining population numbers and modest per capita incomes. While its risks variable is slightly more attractive in terms of potential investment, corruption and red tape remain outstanding issues. Additionally, a slow-recovering economy will continue to weigh down on consumer sentiment, although we expect some improvement to domestic demand, due to base effects and lower unemployment rates.
Headline Industry Data (local currency)
- 2011 per capita food consumption: +1.81%; forecast to 2015:+13.61%
- 2011 alcoholic drinks sales: +1.50%; forecast to 2015: +13.58%
- 2011 soft drinks sales: +1.55%; forecast to 2015: +14.96 %
- 2011 mass grocery retail sales: +3.08%; forecast to 2015: +28.39%
Key Company Trends
Hypermarket Expansion Continues – French retailer Carrefour will open its sixth hypermarket in Bulgaria in autumn 2011. The hypermarket, which will cover 5,000m2, will sell 50,000 items and have 200 employees. The retailer opened its first hypermarket in Bulgaria in Burgas in 2009 and has since opened stores in Plovdiv, Varna, Sofia and Ruse, targeting key urban areas across the country. Carrefour is aiming to capture a 20% share of the hypermarket segment with the planned 20 outlets.
Key Risks to Outlook Risks Both on the Downside and the Upside – Given that Bulgaria’s economic recovery has been lead by exports rather than domestic consumption, a significant slowdown in external demand, especially in the eurozone, would have a deleterious impact on both Bulgaria's economic growth forecasts and its expenditure on food and beverages, especially of the non-essential variety. On an upside, the government's ongoing efforts to tackle corruption and attempts to improve the business environment could result in a credit rating upgrade from international ratings agencies. This would be highly beneficial to Bulgaria, helping to anchor foreign investor sentiment and raise the country's future growth prospects over the longer term. Moreover, looking ahead, a show of commitment to budget discipline coupled with already improving fiscal dynamics could add weight to Bulgaria's aspirations to join the euro, which we expect to occur in 2012 at the earliest.
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