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Netherlands Food and Drink Report Q4 2011
Business Monitor International, Oct 2011, Pages: 86
Although the Dutch economy returned to growth in 2010 with full-year GDP coming in at 1.8% year-onyear, slowing export growth and fragile consumer confidence means the country’s economy will most likely lose some momentum over the coming quarters. Moreover, fiscal austerity measures should keep the job market under pressure. Nonetheless, BMI do not expect economic recovery to be derailed and forecast real GDP growth of 2.2% in 2011. Overall, the consumer sector in the Netherlands appears to be better positioned than many of its neighbours to register growth over the long term.
Headline Industry Data
- 2011 per capita food consumption = +3.7%; forecast to 2015 = +17.1%
- 2011 alcoholic drink sales = +3.1%; forecast to 2015 = +15.8%
- 2011 soft drink sales =+4.9%; forecast to 2015 = +23.9%
- 2011 mass grocery retail sales = +6.0%; forecast to 2015 = +29.1%
Key Industry Trends & Developments
Unilever Restructures to Focus on Emerging Markets – Anglo-Dutch consumer goods giant Unilever has recently outlined structural changes to its management hierarchy designed to accelerate growth in emerging markets power more effectively. Under the new organisation, Unilever will have category heads covering, firstly, skin, deodorants, oral and hair; secondly, refreshment; thirdly, food; and fourthly, home care. The global span of these reporting units fits with BMI's core view of major brand builders looking to globalise their brands, and should also position the firm to prioritise investment to those markets that are offering the strongest growth in any particular category.
Ahold Plans for Entry into Germany – Leading Dutch retailer Ahold has recently revealed plans to expand into Germany, opening its first store in the country in the second half of 2012. The retailer is to focus on its AH To Go c-store format with initial store openings in Cologne and Dusseldorf on the radar. Although Germany is one of the most competitive retail markets in Europe, the company believes it can succeed in the market: ‘They are ready for another competitor [in the convenience sector] and that could be us.’
Key Risks To Outlook
- Export Growth Faltering – It is BMIs core view that export growth, although remaining strong, has probably peaked as the rapid expansion in export orders seen in 2010 is now losing some steam. Export growth has slowed markedly in the year to date in 2011 and BMI expect a continuation of this trend to keep wider economic growth in check.
- Eurozone Debt Crisis – Meanwhile, the ongoing eurozone crisis poses a threat to investor confidence towards the entire region. The risk of a major sovereign credit event in Europe would further damage confidence, putting significant pressure on export demand and, therefore, on the Netherland’s economic growth and consumption. While BMI expect Dutch sovereign bond yields to remain relatively insulated from wider market jitters, a continued deterioration in the regional crisis could drag on economic growth.
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