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Estonia Food & Drink Report 2012
Business Monitor International, Nov 2011, Pages: 92
Business Monitor International's Estonia 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 Estonia's food and drink industry.
Estonia is still considered one of a lower medium-tier food and drink investment destinations in the Emerging Europe region. While its risk profile is one of the most benign in the region, its rewards are considerably below par, dragged down by market maturity, increasing saturation of its mass grocery retail (MGR) industry, the population’s small size, and modest growth forecasts for its food consumption, partly due to the expected economic slowdown in 2012.
Headline Industry Data (local currency)
- 2011 per capita food consumption: +1.77%; forecast compound annual growth rate to 2016:+1.78%
- 2011 alcoholic drinks sales (volume): -0.48%; forecast compound annual growth rate to 2016:+2.45%
- 2011 soft drinks sales (volume): +2.11%; forecast compound annual growth rate to 2016:+3.58%
- 2011 mass grocery retail sales: +4.34%; forecast compound annual growth rate to 2016:+8.16%
Key Company Trends
New Uses for Farm Products - Eesti Energia, the national energy company, was in October 2011 reported by Baltic Times to be planning the construction of an ethanol production site. The facility, which is to be located in Narva, will be part-funded by private investor Hans Luik. Eesti Energia and its partner have reportedly already struck deals with local farmers, who will supply 300,000 tonnes of rye and wheat – expected to produce 100,000 tonnes of liquid biofuel. The construction of the site is scheduled to be completed in 2014, at a cost of between EUR60mn and EUR80mn.
Ease of Doing Business in Estonia Waning – According to the 2011 version of the World Bank and International Finance Corporation (IFC)’s Ease of Doing Business ranking, Estonia ranks 24th, out of 183 countries, sliding by six places in relation to 2010. This drop places Estonia behind its Baltic neighbour Latvia, which posted a 10-place improvement, as well as the less developed economy of Macedonia. Key concerns included construction permits, although the country still scores very highly for ‘ease of trading across borders’, which improved following its introduction of the euro at the start of 2011.
Key Risks to Outlook Deterioration in External Environment and Household Spending - Given Estonia's status as a eurozone state since January 2011, a more severe deterioration in the eurozone debt crisis will have a significant impact on the country's economic and investment outlook, despite its relatively good sovereign and economic risk profile. BMI also notes downside risks to its outlook for household spending. The high household debt load could work to weigh on private consumption more than BMI currently expects, reducing the frequency of discretionary purchases in particular.
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