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Slovakia Food and Drink Report Q3 2011
Business Monitor International, June 2011, Pages: 89
The Slovakia 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 Slovakia's food and drink industry.
The outlook for consumer spending in Slovakia is currently relatively positive. BMI expects the Slovak economy to experience a sustained recovery into 2011, complete a rebound in consumer spending by 1.5%. While exports will remain key to growth, BMI believes that they will begin to play a less prominent role in driving real GDP growth in 2011. Though the unemployment rate remains stubbornly high, BMI expects that the sustained economic recovery in the country will see this rate come down in the second half of the year. However, high food inflation and recently increased taxes on alcoholic drinks will continue to feed through to consumer prices, negatively impacting volume sales, especially of premium goods.
Headline Industry Data (local currency)
- 2011 per capita food consumption = -0.85%; forecast to 2015 = +9.04%
- 2011 alcoholic drinks sales = +3.18%; forecast to 2015 = +15.95%
- 2011 soft drinks sales = +6.12%; forecast to 2015 = +37.45%
- 2011 mass grocery retail = +1.17%; forecast to 2015 = +12.82%
Key Company Trends
Slovakian Manufacturing Still Attracting Interest – Polish confectionery firm E. Wedel, which was acquired by South Korea-based Lotte Group, is considering expanding its operations in Eastern Europe, reported Retail Portal for Poland in April 2011. The company is planning to open five new plants either in Poland or in countries such as Slovakia and the Czech Republic. The construction of each plant will cost the firm several dozen million euros. The firm is also considering the diversification of production. Moreover, it is relocating its chocolate production line to Warsaw from Wroclaw.
Risks To Outlook
Upside Risks to Household Consumption Forecasts – Upside risks to our forecasts are based on the possibility of higher consumer spending, in line with economic recovery and better credit conditions. BMI has already seen evidence of higher credit growth, increasing by 6.3% year-on-year (y-o-y) in February 2011, which BMI expects will reinforce the growing trend in household spending. The positive outlook on consumption is further underpinned by the trend we are seeing in improving consumer confidence, which is beginning to feed through to retail trade numbers.
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