Abstract
The outlook for the Dutch economy appears to be gloomy, GDP is expected to
contract by 3.4% in 2009
followed by a further contraction of 0.4% in 2010
and this is having a knock-on effect on the country’s
food and drink
industry. This quarter has seen a number of the country’s food and drink
producers as well
as its retailers announce falling sales and profits.
Among those companies feeling the pinch are Netherlands-based fresh meat
producer Vion and Dutch
food group Wessanen. Vion announced this quarter
that for FY08 its net profit had fallen 57% year-onyear
(y-o-y) to EUR54mn
(US$73.7mn), while Wessanen registered a net loss of EUR3.3mn for Q109.
Both companies cite high input costs as one of the reasons for the
disappointing profit levels particularly
since these cannot be passed on
to the consumer in such a price sensitive market. In the drinks industry
Dutch brewing giant Heineken is also feeling the effects of a dip in consumer
spending reporting that
during Q109 like-for-like sales decreased 1%,
while like-for-like beer sales by volume fell 6%. However,
this drop in
volume sales cannot solely be attributed to the turbulent economic conditions,
the Dutch beer
industry has reached maturity and as such volume sales are
expected to drop 4% between 2008 and 2013.
Despite concerns over the
economy and weakening consumer confidence, a number of companies are
considering investments. Among such companies are UK-based Cadbury, which has
reportedly made a
bid for Netherlands-based confectionery manufacturer
Leaf International, and Netherlands-based soft
drink producer Refresco,
which has announced plans to expand its operations in Spain and the
Netherlands.
Moving to the mass grocery retail sector, this quarter has
seen some of the country’s retailers struggle.
Both Ahold and
Schuitema reported a decline in profit for Q109, the former announced a 24%
drop in
net profit while the latter posted a 37% decrease in operating
profit and an 8.4% reduction in sales when
compared to the same period
last year.
While activity this quarter has been largely negative with
reports of declining sales and profits, the actions
of Cadbury and
Refresco suggest that the Netherlands still presents opportunities despite
both its maturity
and the current economic conditions, as shown by the
country’s favourable position in BMI’s Western
European Food &
Drink Business Environment Ratings where it comes second out of eight
regional
markets.
| 
View Cart
