Greece Food & Drink Report Q4 2013 - New Report Available

From: Fast Market Research, Inc.
Published: Mon Aug 19 2013

Greece has been battered by the eurozone sovereign debt crisis, enduring five years of economic contraction. The economic, political and social damage wrought by the crisis will leave an indelible mark, and on the consumption front, domestic demand conditions remain woefully bleak. Retail sales fell by 5.7% year-on-year (y-o-y) in March, which, although marking a significant improvement from the 14.1% y-o-y plunge the previous month, nonetheless marks the 33rd consecutive negative reading. With the ranks of the unemployed continuing to swell (the unemployment rate hit 26.8% in March) and disposable income under continual pressure, household spending is severely depressed. In our view, consumer spending is likely to lag any eventual broader economic recovery.

Headline Industry Data (local currency)

* 2013 per capita food consumption = -2.5%; forecast compound annual growth rate (CAGR) 2013-2017 = +1.4%.
* 2013 alcoholic drink value sales = -3.6%; forecast CAGR 2013-2017 = +1.6%.
* 2013 soft drink value sales = -5.0%; forecast CAGR 2013-2017 = 0.5%.
* 2013 mass grocery retail sales = -0.7%; forecast CAGR 2013-2017 = +1.9%.

Full Report Details at

Key Company Trends

Companies Remain Committed To Greece Despite Outlook: Given the gloomy economic and consumer outlook for Greece, companies are likely to increase their focus on cost-reduction strategies. The question remains of how far they are prepared to go, as the political situation remains electrified. Nevertheless, some companies remain committed to the country. For example, in March 2013, the Greek division of Switzerland-based food and drink company Nestle dismissed news reports that it has asked the Greek government to make it easier to fire employees, reports Greek Reporter. Instead, the company reportedly has plans to invest around EUR8mn (US$10.4mn) into modernising its factories and developing new products.

Key Risks To Outlook

Uncertain Economic Outlook And Risk Of Deflation: Given the severity of Greece's economic depression (which has eroded demand-side price pressure) and the fragility of the global economy (which is weighing on commodity prices), we believe that the risks to our core forecasts are to the downside. Should the rate of economic contraction accelerate or local monetary conditions tighten even further, we warn that prices could concomitantly fall beyond what we currently anticipate. There is also a lingering risk posed by global commodity prices. Should demand from fast-growing emerging markets, particularly China, slow sharply, commodity prices could undergo a significant correction, which would push down imported price pressure in Greece.

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