A more challenging global economic environment and the intensifying sovereign debt crisis plaguing the eurozone continue to undermine the outlook for German household consumption growth.
Recent data releases from Germany point to slowing economic activity and suggest that the sharp decline in business confidence witnessed in August 2011 has further to run. Accordingly, we believe that impressive German growth dynamics seen in late 2010 and during the first quarter of 2011 marked the peak of the economic recovery cycle. We now anticipate a more subdued economic growth trajectory and have lowered our 2011 real GDP growth forecast to 3.1% from 3.5% previously.
Germany Food and Drink Market Report Q1 2012
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Headline Industry Data
2011 per capita food consumption = +2.7%; forecast to 2016 = +15.4%
2011 alcoholic drink sales = -0.2%; forecast to 2016 = +1.8%
2011 soft drink sales = +2.2% ; forecast to 2016 = +12.4%
2011 mass grocery retail sales = +5.1%; forecast to 2016 = +28.4%
Key Company Trends
DMK Urges Further Dairy Sector Consolidation: In autumn 2011, dairy giant DMK (formed from the merger of Nordmilch and Humana) reiterated that further consolidation is needed in Germany’s dairy sector to ensure the country can compete in the world’s fast-growing markets for dairy products. The company said DMK should not be the only dairy processor in Germany to drive consolidation in the sector. The company also revealed plans to open a sales office in Shanghai by the end of 2011 as DMK expands its presence in the fast-growing Chinese dairy market.
Asset Sale At Metro Could Fund Emerging Markets Cash & Carry Push: The CEO of German retail giant Metro Group, Dr Eckhard Cordes, recently issued a surprise statement to the effect that he will not look to extend his current contract beyond October 2012, when it expires. The announcement followed several weeks of rumours over his future. It had been common knowledge that family-owned Haniel, which holds a 34% stake in Metro, has been unhappy with Cordes’ failure to find a buyer for the firm’s department store and supermarket units, which registered lacklustre growth over the last four years. There is also reported to be a dispute about the management of the company’s consumer electronics unit MediaMarkt-Saturn. Metro is the world’s fourth largest retailer by sales, but there is a strong argument in favour of radical reorganisation and we would attribute this uneasiness on the part of shareholders to lack of progress in this direction.
Key Risks to Outlook
Eurozone Uncertainty: We caution that a sharper deceleration of the global economy in H211 and an escalation of the eurozone sovereign debt crisis – potentially resulting in a disorderly default by Greece or the collapse of a major financial institution in Europe – would present substantial downside risks to our growth forecast.
Export Competitiveness: A deteriorating global economic outlook and the prospect of major fiscal austerity across Europe in the near-to-medium term could see German exports underperform our current projections. This is particularly in light of signs of slowing demand in emerging market economies, such as India and China, countries upon which German exporters have grown increasingly reliant on in recent years.
- BMI Industry View
- SWOT Analysis
- Germany Food Industry SWOT
- Germany Drink Industry SWOT
- Germany Mass Grocery Retail Industry SWOT
- Business Environment
- BMI’s Core Global Industry Views
- Table: Food Prices, 2010 And 2011
- Table: BMI’s Core Views For The Food & Drink Industry
- Western Europe Risk/Reward Ratings
- Table: United Kingdom Food & Drink Risk/Reward Ratings – Q112
- Table: Western Europe Food & Drink Risk/Reward Ratings – Q112
- Germany Food & Drink Business Environment Rating
- Macroeconomic Outlook
- Industry Forecast Scenario
- Consumer Outlook
- Food
- Food Consumption
- Table: Germany Food Consumption Indicators – Historical Data & Forecasts
- Confectionery
- Table: Confectionery Value/Volume Sales – Historical Data & Forecasts
- Drink
- Soft Drinks And Bottled Water
- Table: Soft Drink Value Sales – Historical Data & Forecasts
- Alcoholic Drinks
- Table: Alcoholic Drink Value/Volume Sales – Historical Data & Forecasts
- Hot Drinks
- Table: Hot Drink Value Sales – Historical Data & Forecasts
- Mass Grocery Retail
- Trade
- Table: Germany MGR Sector – Sales Value by Format – Historical Data & Forecasts
- Food
- Key Industry Trends And Developments
- Germany Hit By E.coli Outbreak
- Convenience Hits The Spot In Germany
- German Organic Food Receives Boost After Dioxin Food Scandal
- Arla’s International Ambitions Come To Fruition With Germany’s Hansa-Milch
- DMK Urges Further Dairy Sector Consolidation
- Dr Oetker Sells Onken Brand
- More Retailers Embracing Private Labels
- Katjes Looking for Stronger International Growth Following Lamy Lutti Acquisition
- German Bakeries Hit Hard Times
- Market Overview
- Food Sector
- Prepared Food
- Table: Frozen Fruit And Vegetables
- Table: Snack Foods
- Table: Pasta
- Organic
- Dairy
- Table: Dairy
- Table: Meat
- Table: Fish
- Table: Oils And Fats
- Drink
- Key Industry Trends And Developments
- Consolidation Moves In Soft Drinks
- Carlsberg Sells German Brewery, Further Consolidation Likely
- BMI Sees Merit Of CCE Expanding Into Germany
- German Wines Eye Asian Markets
- Domestic Wine Demand Resilient
- Market Overview
- Soft Drinks
- Alcoholic Drinks
- Mass Grocery Retail
- Key Industry Trends And Developments
- Metro CEO Bows to Pressure; BMI Believes More Radical Reorganisation Needed
- Tengelmann Distances Itself From A&P In US
- Grocery Retail Competition Probe Launched
- Discount Sector Faces Possible Resurgence From Supermarkets
- Expansion Across Sectors To Hedge Bets
- Market Overview
- Table: Structure Of Germany’s Mass Grocery Retail Market – Estimated Number Of Outlets
- Table: Structure Of Germany’s Mass Grocery Retail Market – Sales Format By Value (US$bn)
- Table: Structure Of Germany’s Mass Grocery Retail Market – Sales Format By Value (EURmn)
- Table: Annual Average Sales Per Outlet By Format – 2009
- Competitive Landscape
- Table: Key Players in Germany’s Food Sector (2008)
- Table: Key Players in Germany’s Drink Sector (2008)
- Table: Key Players In Germany’s Mass Grocery Retail Sector
- Company Monitor
- Food
- Oetker Group
- DMK
- Haribo
- Lieken Group
- Drink
- Emig GmbH & Co KG (GerberEmig Group)
- Radeberger Group (Oetker Group)
- Anheuser-Busch InBev Germany
- Mass Grocery Retail
- Lidl Group
- Rewe Group
- BMI Methodology
- Food & Drink Business Environment Ratings
- Ratings Methodology
- Ratings Overview
- Ratings System
- Indicators
- Table: Limits Of Potential Returns
- Table: Risks To Realisation Of Potential Returns
- Weighting
- Table: Weighting
- BMI Food & Drink Industry Glossary
- Food & Drink
- Mass Grocery Retail
- BMI Food & Drink Forecasting And Sourcing
- How We Generate Our Industry Forecasts
- Sourcing