In BMI’s Business Environment Ranking table of Food and Drink Ratings, Slovakia remains firmly in the bottom place out of the 14 markets in the Central and Eastern Europe (CEE). Key weaknesses of operating food and drink business in the country include the fact that food consumption is expected to decline over the forecast period, which represents a unique scenario in the region. Although Slovakia scores fairly well for risks to realisation of potential returns, with a receptive regulatory climate and few major barriers to entry, the overall country score is unlikely to improve in the coming months.

Nevertheless, the market has been showing some signs of activity. UK retail giant Tesco has recovered from the recent set-back of competition authorities blocking its acquisition of stores presently owned by French Carrefour, and has announced a new wave of expansions for the Slovak as well as Polish markets. In Slovakia, Tesco is looking to open 15 new stores and plans to debut its convenience store format, having recently inaugurated a new distribution centre, which will supply its CEE operations with non-food products.

Similarly, indicating that the Slovak market is not entirely without promise, UK retail giant Marks & Spencer revealed its expansion plans for Central and Eastern Europe, aiming to open 30 stores in the Czech Republic, Slovakia, Latvia, Lithuania and Estonia over the next few years. The UK retailer is planning to achieve its goal through the US$21mn investment in the joint venture (JV) with COMS, which presently operates a total of 13 stores in those countries.

In the longer term, Marks & Spencer is aiming to generate 15-20% of group revenues from its international operations, given the competitiveness of its home market. In the meantime, some food and drink segments, such as confectionery, are expected to benefit from premiumisation and marketing support among other factors common to wider global changes, with their sales forecast to rise by 34% in terms of value through 2012. The opportunities in this area are being acknowledged by foreign majors, include Cadbury Schweppes, which has been linked with a EUR270mn investment in either Slovakia or Poland, as is Dutch manufacturer Leaf International, which in 2007 opened a new production plant in the country.