The latest edition of our proprietary food and drink business environment ratings is based on new methodology, which aims highlight the markets that have the greatest longer-term opportunities for manufacturers and suppliers. Owing to its relatively evenly balanced rewards and risks profile, Romania ranks an improved fifth out of the 15 markets surveyed in emerging Europe. However, its longer-term potential will remain hampered by negative demographic trends, including the small youth population and large segments of rural inhabitants without proper access to organised retail.

Headline Industry Data (local currency)

- 2011 per capita food consumption = +2.73%; forecast compound annual growth rate to 2016 = +5.07%
- 2011 alcoholic drinks sales = +3.32%; forecast compound annual growth rate to 2016 = +7.77%
- 2011 soft drinks sales = +4.22%; forecast compound annual growth rate to 2016 = +4.27%
- 2011 mass grocery retail = +7.29%; forecast compound annual growth rate to 2016 = +10.09%

Key Industry Trends And Developments

Consolidation of the Confectionery Market: In November 2011, leading Romanian chocolate producer Kandia-Excelent was reported to be in the process of acquiring its Romanian peer Supreme Chocolat in a bid to boost its competitive position in the local market. The latter manufactures well-known brand Primola at its factory in Bucharest. The enlarged unit, provided it receives regulatory approval, will be the secondlargest player in the local confectionery market, after US firm Kraft.

Romania Remains of Interest to Foreign Players: In November 2011, Orkla Foods Romania, a subsidiary of Norwegian food processor Orkla Foods, was reported to be planning to buy a local producer, making it the first acquisition for more than five years. The acquisition targets are thought to include manufacturers of Linco margarine and Ardealul pate, although the companys representatives have not disclosed exact details of their programme. Nevertheless, the acquisition is expected to help the company achieve up to a 20% yearon- year (y-o-y) rise in sales revenues in 2012.

Key Risks to Outlook

Downside Risk To Growth Forecast: The eurozone sovereign debt crisis presents a substantial risk to global and thereby also to Romanian economic growth. Although our core scenario is for policymakers to reluctantly take the action necessary to contain the crisis, the risk exists that a disorderly outcome is realised – potentially catalysing a renewed global downturn. Romania would be extremely vulnerable under such a scenario, given that it banks on exports to uphold its growth rates.