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Slovenia Food and Drink Report Q2 2010
Market |
Food and Drink |
Report Type |
Market Research |
Country |
Slovenia |
Published |
16 February 2010 |
Number of Pages |
82 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
File Format |
- |
In our Q210 Business Environment Ratings (BER) matrix for emerging Europe, Slovenia remains in seventh position out of the 15 key markets surveyed in the emerging Europe region. Its small population and the dented consumer confidence levels, which are unlikely to recover in the course of 2010, will continue to hamper faster value development of the food and drinks market. For 2009, we estimate that food consumption in Slovenia declined by 0.77% in local currency terms, to EUR3.51bn (US$4.49bn). Recovery will take place in 2010, albeit at a rate of only 0.67%. Beyond this year, annual growth levels will remain in low single digit figures through to 2014.
Key trends in the food market will be based on the fact that consumers are increasingly demanding cheaper, more convenient food options, while also being willing to spend more on premium quality items (once the economy recovers). Options for cheaper foodstuffs will be provided by the discounts offered by hypermarkets and large food outlets that benefit from economies of scale, and which will compete on prices in the face of rising competition in the sector as well as the current financial crisis. Premiumisation will be more muted, given the current economic climate, while consumption of certain premium brands as occasional luxuries will prevent demand falling off altogether.
In the meantime, challenging operational conditions in the home market are forcing a number of players – both in the food, drink and mass grocery retail (MGR) industries – to look abroad for growth. To this end, in December 2009, having recently launched its first supermarket store in Bulgaria, Slovenias dominant MGR operator, Mercator, opened its first hypermarket in Albania, taking its operating presence to the total of seven markets. Around the same time, Mercator acquired an additional 30% of its Montenegrin subsidiary Mercator-Mex, which took its overall holding to 81%. The leading Slovenian food and drink company, Droga Kolinska, is also increasingly targeting foreign markets, with a particular focus on the Balkans. In fact, South Eastern Europe already accounted for 68% of group sales in FY08, compared to the joint 26% achieved in the EU and other markets.
On the purely economic front, we maintain our core scenario for Slovenia, that of a GDP contraction for 2009, although signs are now more positive. Additionally, with the eurozone showing tentative signs of recovery earlier than we were originally expecting, we now highlight upside risks to this forecast. There are prospects for the export-oriented industrial sectors across Europe, including those in Slovenia, to experience a stronger recovery than we previously expected. While this does not suggest that Slovenia itself will experience a full bounce back in 2010, it does highlight potential for headline growth to exceed 1.0%, which could also be positively reflected in overall food consumption value growth for the year.
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