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Romania Food and Drink Report Q3 2011
Business Monitor International, June 2011, Pages: 106
The Romania 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 Romania's food and drink industry.
In the Food and Drink Business Environment Ratings (BER) table for Q311, Romania remains ninth (out of 15 key regional markets), having moved up one place in the previous quarter. With the country’s economy only recently emerged from recession, Romanian consumer confidence levels are still dented, even though there are positive signs regarding unemployment levels. We envisage modest GDP recovery for the year, driven by exports, rather than by private domestic demand. Generally speaking, Romania’s population size (of close to 22mn) will continue to theoretically provide longer-term opportunities for manufacturers of food and drinks, although improvements in physical and regulatory infrastructures are also required.
Headline Industry Data (local currency):
- 2011 per capita food consumption = +1.85%; forecast to 2015 = +10.01%
- 2011 alcoholic drinks sales = +3.41%; forecast to 2015 = +22.85%
- 2011 soft drinks sales = +5.22%; forecast to 2015 = +26.07%
- 2011 mass grocery retail = +8.90%; forecast to 2015 = +48.59%
Key Company Trends :
Increased Interest in Romanian Market for Fast Foods – Indicating a return of investor confidence and also changing consumption patterns driven by economic and social changes, KFC Romania, a local subsidiary of US-based fast food chain Kentucky Fried Chicken (KFC), is planning to open a new drive-through restaurant in Iasi, making it the second in the country once it is inaugurated in autumn 2011. Similarly, Sibiubased food processor Scandia Food launched its first restaurant in the capital city of Bucharest and will open six or seven more restaurants during the coming 12 months.
Beer Market Stages a Recovery in Early 2011 – first two months of 2011 witnessed a 0.6% year-on-year (yo- y) increase in beer sales, thanks to a 3.1% month-on-month (m-o-m) February increase, according to Ziarul Financiar’s figures, which are based on the National Statistics Institute (INS)’s data. In 2010, the country’s beer volumes topped 17mn hectolitres, a 3.4% decline on 2009, according to the Romanian Brewers' Association, which jointly represent 90% of the market.
Key Risks to Outlook
Upside Risks to Inflation – We envisage an upside risk to our current inflation forecasts, as unrest in the Middle East and North Africa region has resulted in a sharp move upwards in oil prices. While we currently forecast oil prices to moderate (from above US$110/bbl for Brent) through H211 on account of ample spare OPEC capacity, we acknowledge the risk that supply disruption beyond Libya would likely keep prices elevated for a prolonged period, pushing up Romanian inflation in 2011. This will clearly have a bearing on the performance of the country’s food and drink markets, which have begun to recover tentatively.
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