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Czech Republic Food and Drink Report Q1 2012
Business Monitor International, Nov 2011, Pages: 99
Business Monitor International's Czech Republic 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 Czech Republic's food and drink industry.
The Czech consumer outlook will remain challenging, at least in the short term. Household and government spending are expected to remain in the doldrums over the course of 2012, as they were throughout 2011, as austerity measures continue to bite. Unemployment remains high, and there is little optimism on this front in the coming few months, especially as the country’s GDP growth forecast has just been revised downward on the back of global macroeconomic headwinds and a persistently high degree of uncertainty in the eurozone. All this will continue to weigh on consumers’ discretionary spending.
Headline Industry Data (local currency)
- 2011 per capita food consumption = +1.18%; forecast compound annual growth rate to 2016 = +2.23%
- 2011 beer volume sales = +0.03%; forecast compound annual growth rate to 2016 = +0.09%
- 2011 confectionery volume sales = +2.10%; forecast compound annual growth rate to 2016 = +2.93%
- 2011 mass grocery retail sales = +0.61%; forecast compound annual growth rate to 2016 = +6.40%
Key Company Trends
Mass Grocery Retail Players Diversifying Their Offerings
In light of the difficult consumer and economic confidence situation, mass grocery retail operators are investing in new services in order to maintain their volume sales. In September 2011, UK giant Tesco launched the NCR SelfServ Checkout system in its stores in eight countries across CEE, including the Czech Republic. Around the same time, German grocery store operator Metro Group‘s Makro Cash & Carry chain launched a new discount website, makromanie.cz, in the Czech Republic. The website sells products at discounted prices if enough people take part in the promotion.
Domestic Brewers Increasingly Turning to Exports
In September 2011, StarBev reported it would expand its flagship beer brand Staropramen in international markets. The company has announced a first round of investments, including a EUR1.2mn (US$1.6mn) renovation of the Staropramen Visitor’s Centre in Prague as well as the launch of an international marketing campaign. The company aims to expand its business in the growing international Czech beer segment over the next 12 months. The company‘s total turnover in 2010 increased by double digits in countries where it exports Staropramen, with StarBev expecting to maintain this momentum for the remainder of 2011.
Key Risks To Outlook
Further Slowdown In Eurozone
A more pronounced slowdown in eurozone growth than BMI is currently forecasting would weigh considerably on Czech growth. The country is heavily reliant on the external market for growth, particularly during the time when government expenditures are dragged down by fiscal austerity and as consumers struggle to bounce back from the global recession.
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