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Ukraine Food and Drink Report Q3 2011
Business Monitor International, June 2011, Pages: 98
The Ukraine 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 Ukraine's food and drink industry.
For the Q311 update of the proprietary Business Environment Ratings (BER) matrix for the 15 key Central and Eastern Europe (CEE) markets, Ukraine ranks last, having slipped from the second-last position occupied in the previous quarter. Ukraine’s position is largely the consequence of its economic situation, which has inspired relatively little investor confidence, while also not allowing for strong per capita value growth of food and drinks sales values. While the lack of saturation in the country’s mass grocery retail (MGR) and food and drinks marketplaces remain an attractive position, high inflation and constraints on government and also on individual consumer spending will continue to shape the development of consumption values.
Headline Industry Data (local currency)
- 2011 per capita food consumption = +7.9%; forecast to 2015 = +46.9%
- 2011 alcoholic drinks sales = +4.7%; forecast to 2015 = +39.9%
- 2011 soft drinks sales = +6.9%; forecast to 2015 = +48.1%
- 2011 mass grocery retail = +10.0%; forecast to 2015 = +57.2%
Key Company Trends
Ukrainian Agriculture and Dairy Industries Remains of Interest – Ukrainian agriculture, which has received a significant cash boost of nearly US$400mn, will also benefit from lower corporate taxes. In fact, eyeing larger shares of the regional dairy market, French dairy major Danone – which recently finalised its merger in Russia and across the Commonwealth of Independent States (CIS) with its Russian peer Unimilk – in March 2011 started a joint milk production and processing project with Ukrainian company Astarta.
Key Risks to Outlook
Commitment Meeting International Loan Conditions – Risks to our forecasts stem from a relatively unstable political and economic situation, including high inflationary pressures. Overall, we also caution that our core view is contingent on the government's successful adherence to its International Monetary Fund (IMF)’s Stand-By Arrangement (SBA). Indeed, should the international lender find Ukraine in contravention of its commitments and suspend the SBA, Ukraine would find its access to international capital markets significantly curtailed, in our view, posing risks to the country's macroeconomic stability and performance. This scenario would clearly have a bearing on consumer confidence and purchasing patterns, especially given that per capita annual spending on food and non-alcoholic drinks – which is already modest by international standards – has been disadvantaged by local currency weakness.
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