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Hungary Food and Drink Report Q2 2010
Market |
Food and Drink |
Report Type |
Market Research |
Country |
Hungary |
Published |
26 February 2010 |
Number of Pages |
86 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
In our Food and Drink Business Environment Ratings (BER) for Q110, Hungary is again found in second place out of the 15 major Central and Eastern European (CEE) markets surveyed in the matrix. Its favourable ranking is buoyed by high per capita spending on food, which topped US$2,380 in 2008, before the recession, as well as by the largely stable operating conditions. However, Hungary is likely to slip down the rankings table over the coming years, with its composite figure negatively affected by a falling and ageing population, and the rising demand for economically priced foods and beverages. In fact, local sources indicate that domestically-produced – and thus usually cheaper – goods have benefited from recessionary pressures. Overall, having fallen by an estimated 1.44% year-on-year (y-o-y) in local currency terms in 2009, we expect that Hungarian food consumption values will increase by a steady yet modest rate of 19.1% over the coming five years. In 2014, food consumption will reach HUF4,826bn, but only US$24.82bn – which is virtually level with the 2008 figure.
The above forecast will have significant implications for medium- to longer-term foreign involvement in the country. In fact, Belgian brewing behemoth Anheuser-Busch InBev (A-B InBev) has now sold its Hungarian operations, a part of the wider US$2.23bn Central and Eastern Europe (CEE) package. The transaction will see the buyer – CVC Capital Partners – rename the operations StarBev, once the deal is finalised as expected in early 2010. Although the CEE region accounted for close to 14% of AB InBev’s revenue in FY08 (through to December 31 2008), its contribution to earnings was underwhelming, as conditions for brewers had steadily worsened in the course of much of the previous year.
In combination with higher production costs, falling demand and falling prices have, in the meantime, been translated into a 35.6% y-o-y drop in Hungarian farmer income, in what was the worst decline across the EU, which posted a 12% fall overall. Given that most farms in the country are relatively small and without major financial backing, this situation will clearly have an impact on their viability over the coming years, thus also threatening export levels.
On a positive note, in November 2009, leading domestic biscuit manufacturer Gyori Keksz – owned by US-based food major Kraft Foods – officially opened a HUF1bn confectionery factory, located in the north west of the country. The plant will initially produce around 2,200 tonnes of hard candy per annum, although higher manufacturing levels can also be absorbed by the plant’s current capacities.
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