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Germany Food and Drink Report Q4 2011
Business Monitor International, Sep 2011, Pages: 104
Germany 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 Germany's food and drink industry.
Germany's impressive economic growth in the first portion of the year was driven primarily by strong domestic demand, encouraging us to raise our full-year GDP forecast to 3.5% from 3.0% previously. The country's fiscal position requires less drastic restructuring over the next five years than some of its regional neighbours, and there have been signs of optimism emerging from the retail sector. Germany was one of the strongest economic performers in 2010, and the results of the country's leading retailers suggest that the consumer sector may be gathering legs. A trend away from discount stores could be emerging, with long-term implications for the country's retail sector and consumption.
Headline Industry Data
- 2011 per capita food consumption = +2.6%; forecast to 2015 = +10.0%
- 2011 alcoholic drink sales = -0.4%; forecast to 2015 = +0.8%
- 2011 soft drink sales = +2.0% ; forecast to 2015 = +7.5%
- 2011 mass grocery retail sales = +4.4%; forecast to 2015 = +17.8%
Key Company Trends
Germany Hit By E.coli Outbreak: Germany has been hit by an E. coli outbreak that has killed dozens and hit the produce sector badly. The outbreak of the E. coli strain, which was linked to fenugreek seeds imported from Egypt into Germany, left more than 4,300 people ill and 50 dead. The last case of illness linked to the outbreak was seen in early July, and health officials in Germany have declared that the outbreak has come to an end. Sales of fresh produce in a number of European markets have been badly affected, with farmers' federations estimating that growers were losing EUR400mn on a weekly basis.
Asset Sale At Metro Could Fund Emerging Markets Cash & Carry Push: German retail giant Metro has recently revealed it is in talks regarding the possible disposal of is Real hypermarket chain. The firm is also reported to be considering a separate stock market listing for its Kaufhof department store chain.
These two divisions generate around 17% and 5% of the firm's total sales respectively, but by offloading these businesses Metro could generate cash to invest in its cash and carry operations. These account for the bulk of its sales and have greater potential to expand thanks to an increasing demand for the format in fast-growing emerging markets.
Key Risks to Outlook
Eurozone Uncertainty: The risk of financial contagion and political uncertainty in Italy threaten to deepen the eurozone's sovereign debt crisis and require substantially larger fiscal transfers on the part of the largest European economies. This could derail Germany's plans to reduce net borrowing requirements for the state.
Export Competitiveness: A deteriorating global economic outlook and the prospect of major fiscal austerity across Europe in the near-to-medium term could see German exports underperform our current projections.
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