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Hungary Food and Drink Report Q3 2011
Business Monitor International, June 2011, Pages: 100
Hungary 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 Hungary's food and drink industry.
As expected, Hungary has been overtaken by Turkey in our quarterly Business Environment Rating (BER) matrix for the 15 key markets in the emerging Europe region. Hungary now places fourth, as its longerterm attractiveness suffers from factors such as unfavourable demographic trends and the slowrecovering economy. Moreover, with the private sector still holding one of the largest stocks of foreign currency (FX)-denominated debt in Europe, we expect many households to remain focused on deleveraging rather than spending over the course of 2011. In addition, elevated inflation and unemployment levels will exert pressures on the development of food and drinks markets.
Headline Industry Data (local currency)
- 2011 per capita food consumption: +3.37%; forecast to 2015: +17.04%
- 2011 alcoholic drinks sales: +3.46%; forecast to 2015: +23.57%
- 2011 soft drinks sales: +3.15%; forecast to 2015: +20.99%
- 2011 mass grocery retail sales: +2.57%; forecast to 2015: +22.08%
Key Company Trends
‘Unhealthy’ Food Tax on the Cards – In April 2011, the Hungarian government proposed implementing a tax on unhealthy foods, including products with high levels of saturated fat, carbohydrates and high caloric content. Under the proposal, the Association recommended a tax rate of HUF10 (US$0.05) per packaged unit of ready-made dishes. The taxation is seen as a means to encourage Hungarians to follow more healthy diets, but could also be viewed as a revenue-boosting exercise for the authorities that need to adhere to strict fiscal discipline.
Mineral Water Producer Looking to Increase Exports – Hungarian mineral water producer and distributor Szentkiralyi Asvanyviz is looking to expand its presence in new markets with the aim of including 20 new destination markets among its export distribution network. The company aims to expand to foreign markets through acquisitions of peer companies.
Key Risks to Outlook Risks Mostly to the Downside – Hungary is expected to be a regional underperformer in terms of economic growth and recovery. Factors such as elevated unemployment, fiscal austerities and the tight credit conditions will continue to discourage discretionary spending. Rising inflation levels could also push the current forecasts below the present levels, although demand-side pressures remain benign. On the other hand, should Germany's growth in 2011 surprise to the upside, Hungarian exporters will benefit given their close trade and investment linkages, in turn raising the country's growth potential in 2011, although the opposite is also true.
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