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Belarus Food and Drink Report Q4 2011
Business Monitor International, Oct 2011, Pages: 71
The consumer outlook for Belarus has worsened over the past months, with the trend of premiumisation definitely put on hold. Inflation hit 48.4% in July 2011, a particularly striking fact in the highly managed Belarusian economy, where food prices are mandated by law and thus kept artificially low. Anecdotal evidence suggests that the black market is expanding quickly, with the pending free floating of the rouble also to have a further devaluating effect on the currency.
Headline Industry Data (local currency)
- 2011 food consumption = +11.46%; forecast to 2015 = +80.20%
- 2011 per capita food consumption = +11.94%; forecast to 2015 = +84.03%
- 2011 alcoholic drinks sales = +10.15%; forecast to 2015 = +73.35%
- 2011 per capita alcoholic drinks sales = +10.62%; forecast to 2015 = +77.04%
Key Company Trends
Belarus Looking to Increase Its Role in the Sugar Processing Market – In August 2011, BelTA reported that an unnamed Polish company is viewed as a potential partner in the proposed sugar refinery project. The mill, which is to be built in Mogilev Oblast, would have the capacity to process more than 1mn tonnes of sugar beet. The companies engaged in the industry, which is encouraged to increase investment, product range (with a focus on more packaged sugar and products such as jams) and efficiency, and also to diversify its export markets. Presently, most of the Belarus sugar is exported to Russia, which is aiming to improve its domestic capacities for sugar beet processing.
Key Risks To Outlook
Free-Floating Rouble to Increase Pressure on Households – The realisation that the government is unable to keep the exchange rate fixed has led to the announcement that the rouble will be allowed to float, as of mid-September. When this happens, BMI expect its further devaluation, which will increase import prices and inflation. Therefore, BMI expect discretionary spending to remain constrained in the near term.
Inflation and Economic Instability to Increase Potential for Social Unrest – As a result of escalating inflation and the deterioration in economic stability, BMI expect a further erosion of social stability and support for the Belarusian regime. BMI stress that the potential for such resistance to mount has risen sharply since the contested December 2010 elections and will continue to rise as domestic economic conditions sour further.
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