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Greece Food and Drink Report Q1 2010
Market |
Food and Drink |
Report Type |
Market Research |
Country |
Greece |
Published |
5 November 2009 |
Number of Pages |
70 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Fage is the market leader in the yoghurt, packaged cheese, UHT milk and cream sectors in Greece
In Greece, annual real GDP growth turned negative for the first time in 16 years in Q209, with the National Statistics Service (NSS) posting a -0.3% y-o-y outturn. While BMI still expects the economic downturn to have got worse in H209, the tentative emergence of the eurozone from recession, combined with the fairly mild downturn in Greece during H1, has led to a revision of the full-year forecast. BMI now expects the economy to contract by 0.6% in 2009, from a previous projection of -3.5%.
Results published during the quarter from some of country’s largest food and drink players reflect an improvement in trading conditions. In August, Greek dairy producer Fage reported that it had swung back into profit in the first half of the year, following two successive years of losses. In the six months to June 30 the firm generated net profits of EUR6.2mn (US$9.1mn), which compares with a loss of EUR11.1mn (US$16.4mn) in the same period in 2008 and a loss of EUR11.7mn (US$17.2mn) for 2008 as whole. The healthy performance was driven by an improvement in gross profits and the positive impact from the reduction of a fine imposed by the Greek Competition Authority. However, net sales over the period fell by 3.9%, with the decline largely attributable to the economic downturn and less profitable sectors such as feta and graviera cheese. In Greece, Fage is the market leader in the yoghurt, packaged cheese, UHT milk and cream sectors. However, the level of competition means that over the last five years the firm's net sales have stagnated while gross profit margins have declined. Notably, the drop in profitability reversed in the first half of 2009, with cost of sales as a percentage of sales falling and gross margin increasing. This can be partly attributed to the global fall in raw milk prices, in line with the economic downturn, which has constrained demand for dairy products in emerging markets. On the positive side, the firm continued to enjoy success on the export front, led by its Total Greek yoghurt brand. In the first half of 2009 Fage's international sales increased by 3.6% in volume terms and 10.5% in value terms, due largely to volume growth in the US and Italy, which offset a decline in volumes in the UK.
Also during August, Greece-based soft drinks producer Coca-Cola Hellenic (CCH) announced that its net profit increased by 7% year-on-year (y-o-y) to EUR194mn (US$279.2mn) and its sales volume increased by 1% y-o-y to 593mn unit cases during Q209. CCH managing director, Doros Constantinou, said the company exceeded forecast figures despite the ongoing economic slowdown that adversely affected demand for soft drinks in key markets. He added that cost-saving initiatives and lower commodity costs helped in achieving a strong operating profit performance in the quarter.
Overall, Greek consumers are becoming increasingly adventurous when choosing food and drink products. In the past, Grecians have not strayed far from their traditional diet of fresh produce, prepared at home and sourced locally, but this is gradually changing with Greek consumers increasingly opting for ready-prepared items, presenting further opportunities for food and drink producers.
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