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Slovakia Food and Drink Report Q3 2008

http://www.companiesandmarkets.com/Summary-Market-Report/slovakia-food-and-drink-report-q3-2008-49320.asp

Report Summary

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.

Table of Contents

Executive Summary 7

Business Environment ....8

Regional Food & Drink Business Environment Ratings .... 8

Table: CEE Food & Drink Ratings – Q308 11

Slovakia’s Food and Drink Business Environment Rating... 11

Global Food & Drink Business Environment Ratings . 13

SWOT Analysis . 14

Food And Drink 14

Slovakia Food And Drink Industry SWOT 14

Mass Grocery Retail ...... 15

Slovakia Mass Grocery Retail Industry SWOT .. 15

Macroeconomic Outlook ..... 16

Table: Slovakia Economic Activity .. 17

Food ......18

Industry Forecast Scenario . 18

Food Consumption ..... 18

Table: Food Consumption Indicators – Historical Data & Forecast 18

Confectionery.. 18

Table: Value/Volume Sales of Confectionery – Historical Data & Forecasts ... 19

Trade 19

Table: Food, Drink & Tobacco Trade Indicators (US$mn) . 19

Industry Developments .. 19

Market Overview .. 20

Food Consumption ..... 20

Main Players... 20

Confectionery.. 22

Canned Food .. 22

Trade 22

Agriculture. 22

Drink .....24

Industry Forecast Scenario . 24

Table: Alcoholic Drinks Indicators – Historical Data & Forecasts 24

Table: Hot Drinks Indicators – Historical Data & Forecas 25

Table: Soft Drinks Indicators – Historical Data & Forecas 25

Industry Developments .. 25

Market Overview .. 26

Agriculture At A Glance .29

Table: Slovakia Organic Agricultural Data 29

Table: Slovakia Agricultural Production Statistics ..... 29

Agricultural Commodity Price 30

Retail .....31

Industry Forecast Scenario . 31

Table: Mass Grocery Retail Sales By Format (US$bn) 32

Table: Grocery Retail Sales By Format – Historical Data And Forecasts . 32

Industry Developments . 32

Market Overview 33

Main Players... 34
Table: Structure Of Slovakia’s Mass Grocery Retail Market By Estimated Number Of Outlets 35
Table: Structure Of Slovakia’s Mass Grocery Retail Market – Sales Value By Format (US$bn) 35
Table: Average Value Per Outlet, 2007 .... 36
Competitive Landscape .37
Key Players. 37
Mass Grocery Retail ...... 37
Table: Key Players In Slovakia Mass Grocery Retail Sector 2007 37
Food And Drink 38
Table: Key Players: Slovakia Food & Drink Sector 2007 Estimates 38
Company Analysis ...... 39
Mass Grocery Retail ...... 39
Coop Jednota Slovensko sd ..... 39
Tesco Stores SR 40
Schwarz Group ..... 41
Food ... 42
Tauris AS ... 42
Drink ... 43
Heineken Slovensko AS .. 43
Deep US Recession Scenario ....44
Global Scenario 44
Table: World GDP Growth ..... 44
Table: US GDP Growth, Investment Growth, and Private Consumption Growth ...... 45
Table: Eurozone GDP Growth 46
Table: Asia, Excluding Japan, GDP Growth ..... 47
Table: China GDP Growth ..... 48
Table: Mexico GDP Growth ... 48
Table: Africa GDP Growth ..... 49
CEE Food & Drink Scenario 50
Table: Impact Of Deep Us Recession On Total Food Consumption (US$Bn) In Selected CEE Markets - Cumulative US$ Impact Over 5yr
Forecast Period 51
Appendix 53
Food & Drink Business Environment Ratings ....53
Ratings Methodology . 53
Ratings Overview 53
Ratings System ...... 53
Indicators... 53
Limits Of Potential Returns ..... 54
Risks To Realisation Of Potential Returns 55
Weighting... 56
Weighting... 56
BMI Food & Drink Industry Glossary ....57
Food & Drink . 57
Mass Grocery Retail .. 57
BMI Food & Drink Forecasting & Sourcing ...59
How We Generate Our Industry Forecasts .... 59
Sourcing ... 60