Abstract
In BMI’s Food and Drink Business Environment Ratings (BER) for Q409,
Serbia continued to improve
its position in the Central and Eastern Europe
matrix. Having been ranked last and then 11th out of 14 key
markets in the
previous two quarters respectively, Serbia is now placed a much more
favourable 9th. One
of the main reasons for this is actually the more
dramatic worsening of the scores for the Baltic states,
Bulgaria and
Ukraine, which are expected to be more severely impacted by the economic
crisis.
Of course, Serbia cannot avoid the fallout from the financial
difficulties. Therefore, we expect the value
of food consumption to
contract in the course of 2009 and 2010, partly due to stagnating and even
falling
retail prices, before returning to growth in 2013. Overall,
however, through to 2013, we expect food
consumption to post a growth of
6.74% in local currency terms, to RSD662bn (US$9.87bn), which is still
double that of the considerably more developed Slovenia, for example. In the
same period, food
consumption as a percentage of GDP will fall from 23.9%
in 2008 to the forecast 18.6% in 2013, as more
money is spent on
non-essential items and services, rather than basic foodstuffs. However,
calculations
are somewhat distorted by the wide extent of grey economy,
which is not counted towards official GDP
figures and which continues to
drag down Serbia’s overall BER matrix score.
In the meantime,
flagging market performance seems to be taking its toll on some of the
region’s major
players. In June 2009, industry press revealed that
Belgian brewing behemoth Anheuser-Busch InBev
(A-B InBev) is looking for
interested parties to buy its CEE operations, spanning 11 breweries across
Bulgaria, Croatia, the Czech Republic, Hungary, Montenegro, Romania and
Serbia. Interest has
reportedly been expressed by a number of private
equity firms, including TPG and KKR, as well as
Cinven and Warburg Pincus.
Although the region accounted for close to 14% of AB InBev' s revenue in
2008, its contribution to EBIDTA was underwhelming at just over 7%. Conditions
for brewers have
steadily worsened in 2009 – severe economic stress
has forced a sharp alteration in consumer spending,
which continues to
profoundly affect the non-essential beverage category. What is more, with
populations
declining or remaining flat in many of the region' s markets,
the long-term demographic outlook does not
favour brewers, particularly
those that are not market leaders.
Still, some local players seem willing
to take the risk, despite the difficult economic conditions.
Beogradska
Industrija Piva (BIP), 51% owned by a Swedish-Lithuanian consortium, recently
launched
the lightest beer on the Serbian market. The 4.2% abv. Ledeno
pivo is targeting summer drinkers in the
country. Much will hinge on the
weather as well as Ledeno’s marketing success, given the fact that
the
planned investment in BIP has had to be postponed due to economic
adversity. While BIP can take some
hope from the privatisation requirement
imposed on the new owners – that a certain amount of investment
must
be made in the 2009-2010 period – Serbia is unlikely to be the priority
market for the consortium,
possibly prompting some ownership changes.
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