"Hungary Food & Drink Report Q1 2014" now available at Fast Market Research

We expect household spending to decline in 2013, with Q113 data showing a 1.2% y-o-y fall. Despite a 34- year low in consumer price inflation and the lowest policy rate on record (4.25% at the time of writing) private consumption has remained subdued. Retail sales increased just 1.8% y-o-y in April 2013, down from 7.0% y-o-y growth in the same period of 2012, and consumer confidence remains staunchly negative at -33.9 in June. Therefore, this is still a very difficult environment for food, drink and companies operating in the wider fast-moving consumer goods industry.

However, while leading indicators remain in the doldrums, there have been signs of improvement as of late. Consumer confidence has shown a steady, if slow, increase since its low point of -54.1 in January 2012. This is likely due to low interest rates and inflation, which have reduced mortgage and loan repayments. Real wage growth has also remained positive, increasing 5.9% y-o-y in April, which is also likely to have a positive effect on consumer confidence.

Full Report Details at
- http://www.fastmr.com/prod/763965_hungary_food_drink_report_q1_2014.aspx?afid=303

Headline Industry Data (local currency)

* 2013 per capita food consumption: +2.7%; forecast compound annual growth rate to 2017:
* 2013 alcoholic drinks value sales: +3.1%; forecast compound annual growth rate to 2017: +3.6%.
* 2013 mass grocery retail sales: +3.2%; forecast compound annual growth rate to 2017: +4.8%.

Key Company Trends

Hungarian Bakery Chain Expands Domestically, Targets Austria: MTI-Econews reports from April 2013 revealed that the bakery chain Lipoti Pekseg had opened its largest bakery to date. The new unit brings the total number of the bakery chain's stores in Hungary to 180. The chain, which has annual sales of over HUF6bn, also plans to expand to Austria by the end of the year.

Soft Drink Volumes And Values Suffering: Consumption of carbonated soft drinks in Hungary declined 14% year-on-year (y-o-y) in value terms and 4% y-o-y in volume terms in 2012, reports MTI, citing figures released by the Association of Hungarian Soft Drinks and Mineral Water Producers (MUGYASZ). The decline is largely attributable to the negative economic conditions, although there has been a general move away from sugary soft drinks towards healthier alternatives.

Key Risks To Outlook

Possible Energy Prices: On a positive note for private consumption, the government is rumoured to be contemplating another 10% cut to energy prices at some point during 2013. If this does occur, the rate of private consumption contraction would slow as disposable incomes increase, with the resultant boost to imports leading to a more pronounced narrowing of the current account surplus.

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