Abstract
In BMI’s Q409 Business Environment Ratings (BER) matrix for Central and
Eastern Europe (CEE),
Slovenia remains in fifth position – out of 14
key markets – to which it slipped from second in the
previous
quarter. The small size of its market and the economic downturn currently
hampering faster
inflation of the country’s food consumption levels
are some of the main reasons for the worsening of
Slovenia’s
position in the table. However, despite the fall in overall food consumption
values forecast in
the short term, at EUR1,739 in 2008, per capita
spending is the highest in the region, which should
provide some respite
to food and drink companies operating in the country.
In the shorter-term,
however, due to external factors, we expect Slovenia to fall into its first
recession in
almost two decades. Private consumption is expected to
contract and unemployment likely to rise, with
modest recovery expected
beyond 2009. Moreover, official sources recently indicated that the total
value
of agricultural products fell by 2% in May 2009 in relation to the
previous month. Measured in annual
terms, the drop was even more drastic,
at just under 18%, as industrial production falters. Overall,
however,
longer-term potential in Slovenia remains considerable, given its advanced
business climate and
an excellent infrastructure.
While the negative
effects of the current economic conditions cannot be understated, there is
some
positive news from the food and drink industry. For example, in June
2009, leading domestic poultry
processing company Perutnina Ptuj
inaugurated a new factory. The plant, which cost EUR6.5mn and
represents
one of the largest investments to date on a national scale, will be used to
produce protein
concentrate. The conglomerate plans on becoming one of the
largest poultry players in Southern and
Eastern Europe in the coming
years, having also opened a factory in Bosnia in the course of 2008.
This
focus on exports and foreign markets is mirrored in the Slovenian mass grocery
retail (MGR) sector.
In July 2009, leading domestic MGR operator Mercator
reported that it is to launch its first hypermarket
in Albania as well as
Bulgaria before the end of 2009. The company is also expected to enter
Macedonia
and Kosovo by 2012, while it already enjoys considerable
presence elsewhere across the territories of
former Yugoslavia. In fact,
Mercator also recently assumed full control of M-Rodic – its
Serbia-based
supermarket subsidiary – after buying up the
outstanding 12% stake of the retailer it did not already own.
However,
Mercator’s immediate future appears somewhat unsettled, after months of
negotiations over the
sale of some of the shares owned by majority
investors, with Serbian Delta and Croatian Agrokor
previously reported to
be among interested parties.
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