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"Romania Food & Drink Report Q1 2014" Published

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2014-01-04 04:50:57 - Fast Market Research recommends "Romania Food & Drink Report Q1 2014" from Business Monitor International, now available

The recovery of the Romanian economy is gathering steam, and we forecast real GDP growth to accelerate from 0.7% in 2012 to 2.6% in 2013 and 2.8% in 2014. While the growth will be largely driven by the country's robust exports, strengthening domestic consumption is expected to become an important supporting factor. In the coming quarters, Romanian consumers will benefit from the minimum wage and pensions increases as well as modestly easing credit conditions. The improving macroeconomic conditions and rising consumer disposable incomes are expected to set a firm foundation for moderate growth in Romania's food and drink sector over the coming years.

Headline Industry Data (local currency)

Full Report Details at
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* Per capita food consumption growth (year-on-year,

y-o-y) in 2013: +4.86%; compound annual growth rate (CAGR) to 2017: +5.47%
* Alcoholic drinks sales growth (y-o-y) in 2013: +5.08%; CAGR to 2017: +8.54%
* Soft drinks sales growth (y-o-y) in 2013: +5.02%; CAGR to 2017: +6.39%
* Total mass grocery retail sales growth (y-o-y) in 2013: +8.73%; CAGR to 2017: +10.17%

Key Industry Trends And Developments

Coca-Cola Opens New Bottling Line For Juice Brand: In November 2013, The Coca-Cola Company has opened a new bottling line for its Cappy Pulpy orange juice brand at its production facility in Ploiesti, Romania. The company invested EUR22mn (US$30mn) in the new bottling line, which has a production capacity of around 36,000 bottles per hour. The move aims to expand the availability of the Cappy Pulpy beverage throughout the Eastern and Central European region.

Romanian Regulators Approve Auchan's Purchase Of Metro Hypermarkets: In August 2013, regulatory authorities in Romania have approved the sale of 20 hypermarket premises in the country owned by Germany-based retailer Metro. The stores will be acquired by French grocery retailer Auchan in a deal that will make it the second largest retailer in Romania. Competition authorities have been reviewing the proposal since its first announcement in November 2012. The stores in question will be those owned by Metro's Real hypermarket brand.

VAT Cuts To Bread: Value-added tax rate for bread will be cut from 24.0% to 9.0% starting September 1 2013. The tax reduction will have a positive effect on bread production and sales, as it will reduce the shelf prices for the bread products. While we maintain our current forecast for bread sales to expand by a compound annual growth rate of 2.9% to 2017, the figure is likely to be revised upwards over the coming quarters.

Cheese Imports Dwarfing Exports: In April 2013, Romania's Ministry of Agriculture and Rural Development reported that the country's cheese imports were higher than its exports in FY12. Cheese imports were valued at EUR100mn (US$130mn), while cheese exports were valued at EUR25mn (US $32.63mn). Encouragingly, cheese exports volume grew 2.7 times annually in FY12. We expect that the domestic dairy sector will continue improving its capacity and efficiency given the large demand for dairy products in the country. However, we also continue to expect that imports will play a large part in terms of market supply for the foreseeable future.

Romanian Bomax Group Buys Interex's Real Estate In Romania: In April 2013, local press reported that Romanian businessman Sorin Bonciu's Bomax Group purchased Romanian operations of the French supermarket chain Interex. The group is, however, not expected to keep Interex in its portfolio, instead aiming to sell the real estate to another mass grocery retail player or to other companies involved in the retail sector. Interex, which operated 10 stores in Romania, decided in 2012 to close its local operations and exit the market, on account of what we believe were challenging operating conditions, including tough competition from leading discount operators.

Key Risks To Outlook

Downside Political And Economic Risks Prevail: The performance of the Romanian economy will continue being extremely vulnerable to external pressures given its integration into the wider European economy, which remains stagnant.

On the domestic political front, corruption remains an issue, while political instability is also expected to continue over the coming quarters.

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