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Greece Food and Drink Report Q2 2008
Business Monitor International, June 2008, Pages: 72
The Greece Food Drink Report provides independent forecasts and competitive intelligence on Greece's food and drink industry.
Executive Summary:
Greek consumers spend around 40% of their income on food, drink and tobacco, which is significantly higher than in other EU countries. Consequently, BMI does not envisage a strong growth of the food and drinks sector over the coming years, despite some opportunities presented by premiumisation and a steadily rising GDP per capita. However, recent price-fixing scandals will continue to fuel distrust of large organisations, including multinational food processing companies, which are therefore unlikely to achieve higher market penetration. In fact, Greece is currently ranked the most corrupt country in the 15- eurozone area by global anti-corruption watchdog Transparency International.
Overall, Greece is again found at the bottom of the BMI’s Q208 Business Environment Ranking table for Western Europe. The main reasons for this poor performance include the lack of growth in its food and drink market, with Greek consumers showing few signs of varying their traditional dietary preferences, which include home cooking. Consequently, ready-made meals and frozen foods have failed to achieve the prominence they now hold in Western Europe.
Nevertheless, foreign retail operators are continuing to invest in the country. To this end, in February 2008, Belgium-based grocery retailer Delhaize revealed a EUR140mn (US$204mn) investment in its Greek supermarket chain Alfa-Beta in the current year. The investment will be used to increase the number of stores, to improve the company’s distribution network as well as to rebrand the Plus Hellas stores recently acquired from the German Tengelmann Group, which confirmed Alfa-Beta’s position as the second-largest retailer in Greece. However, the room for expansion in the mass grocery retail (MGR) sector is limited, as illustrated by the stagnating supermarket sales over the past years.
In the meantime, companies in the drinks sector are targeting niche markets. In November 2007, Greecebased Coca Cola Hellenic Bottling Company (CCHBC) revealed its intention to create a three-way joint venture partnership with Coca Cola and the Italian coffee company Illycaffè. The venture aims to tap the small, but growing and high-reward, market for ready-to-drink coffee (RTD). The success of the agreement, which shortly following the formation of a global joint venture between Coke and Illycaffè, is not ensured, given the traditional preference for proper coffee in the country.
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