On the back of economic recovery, Latvia significantly improved its position in BMI’s latest version of the Business Environment Ranking (BER) matrix for the Emerging Europe region. The country ranks seventh out of the 15 markets surveyed regionally, ahead of both its Baltic neighbours. Nevertheless, its long-term attractiveness to food and drinks manufacturers will continue to suffer from small population numbers, the market’s relative maturity (including the well-developed mass grocery retail (MGR) sector) and the expected slowdown in its economic growth. Indeed, these factors are illustrated by Latvia’s low reward score (of just 37 out of the maximum 100 points), as its composite score remains propped up by one of best regional risk profile.
Latvia Food and Drink Market Report 2012
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Headline Industry Data (local currency)
2011 per capita food consumption: +3.05%; forecast compound annual growth rate to 2016:+2.84%
2011 alcoholic drinks sales: +4.07%; forecast compound annual growth rate to 2016: +4.10%
2011 soft drinks sales: +6.22%; forecast compound annual growth rate to 2016: +5.93%
2011 mass grocery retail sales: +7.02%; forecast compound annual growth rate to 2016: +5.71%
Key Company Trends
Fazer Exists Restaurant Business in Latvia and Estonia: The catering and restaurant unit of Finnish bakery specialist Fazer (Fazer Amica) has sold its Baltic catering and restaurant business to Fazer Food Services Latvia, as part of its strategy to realign its focus on larger markets of the Nordic countries and Russia. The move also indicates that the company’s long-term view of the Estonian and Latvian markets’ potential was unfavourable. Previously, CEO Karsten Slotte stated that the company was to strengthen its newly created business structure and market position during 2010, as part of the company’s ambition to become the leading food company in the region.
McDonald’s Expanding in Latvia: In October 2011, McDonald’s reported that its first Latvian outlet outside the capital was to open in mid-November in the second-largest city in the country, Daugavpils. The new outlet will be the company’s first two-story restaurant in the country. The fast-food restaurant chain manages eight restaurants in the Baltic region, with a limited number expected to be launched during the coming years, given constraints posed by small population numbers across the three states.
Key Risks to Outlook
Economic and Political Risks: With ructions in the eurozone likely to continue and global macroeconomic headwinds prevalent, consumer confidence could take a hit in the coming months, further weighing on consumer spending in Latvia. Investments could also fall precipitously in the event of shaken investor confidence in the country’s investment environment and/or macroeconomic outlook. On the political front, while we expect the Latvian government to remain stable in 2012 following September 2011’s snap election which saw a three party centre-right coalition come to power, we see potential challenges in the coming year. In particular, we highlight the ongoing austerity push amid a deteriorating macroeconomic backdrop, shoring up support for the eurozone and corruption as potential sources of friction. With the government is committed to tackling endemic graft, the task is not an easy one and may also cause political friction going forward.
- Executive Summary
- SWOT Analysis
- Latvia Food Industry SWOT
- Latvia Drink Industry SWOT
- Latvia 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
- Regional Food & Drink Business Environment Ratings
- Table: Russia Q112 Food & Drink Ratings
- Table: Central & Eastern Europe Food & Drink Risk/Reward Ratings Q112 – Published October 2011
- Latvia’s Food and Drink Business Environment Rating
- Macroeconomic Outlook
- Table: Latvia – Economic Activity
- Consumer Outlook
- Food
- Industry Forecast Scenario
- Food Consumption
- Table: Food consumption indicators
- Confectionery
- Table: Confectionery indicators
- Processed Foods
- Table: Meat
- Table: Snack Foods
- Table: Pasta
- Dairy Industry
- Table: Dairy
- Alcoholic Drinks
- Table: Alcoholic Drink Indicators
- Soft Drinks
- Table: Soft drink indicators
- Hot Drinks
- Table: Coffee
- Mass Grocery Retail
- Table: Retail indicators
- Table: Grocery Retail Sales By Format – Historical Data And Forecasts
- Trade
- Table: Sectoral trade indicators
- Food
- Key Industry Trends and Developments
- Market Overview
- Food Consumption
- Food Processing
- Leading Food Producers
- Confectionery
- Trade
- Agriculture
- Drink
- Key Industry Trends and Developments
- Market Overview
- Alcoholic Drinks
- Beer
- Spirits
- Wine
- Soft Drinks
- Hot Drinks
- Mass Grocery Retail
- Key Industry Trends and Developments
- Market Overview
- Leading Retailers
- Table: Structure of Latvia’s Mass Grocery Retail Market by Number of Outlets
- Table: Structure of Latvia’s Mass Grocery Retail Market – Sales Value by Format
- Table: Latvia – Average Annual Sales Per Outlet By Format, 2011
- Competitive Landscape
- Key Players
- Food & Drink
- Table: Key Players in Latvia’s Food & Drink Sector
- Mass Grocery Retail
- Table: Key Players in Latvia’s Mass Grocery Retail Sector
- Company Analysis
- Food
- Paulig Baltic AS
- Laima
- Margota (Balbiino)
- Drink
- Livu Alus
- Aldaris
- Cesu Alus
- Cido Grupa
- Latvijas Balzams
- Agriculture
- Rigas Piena Kombinats (RPK)
- Mass Grocery Retail
- Maxima LT (formerly Vilniaus Prekyba)
- Rimi Baltic
- Elvi
- Appendix
- Country Snapshot: Latvia Demographic Data
- Section 1: Population
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Section 2: Education And Healthcare
- Table: Education, 2002-2005
- Table: Vital Statistics, 2005-2030
- Section 3: Labour Market And Spending Power
- Table: Employment Indicators, 2001-2006
- Table: Consumer Expenditure, 2000-2012 (US$)
- Table: Average Annual Wages, 2000-2012
- Food & Drink Business Environment Ratings
- Ratings Methodology
- Ratings Overview
- Ratings System
- Indicators
- Limits Of Potential Returns
- Risks To Realisation Of Potential Returns
- Weighting
- Weighting
- BMI Food & Drink Industry Glossary
- Food & Drink
- Mass Grocery Retail
- BMI Food & Drink Forecasting & Sourcing
- How We Generate Our Industry Forecasts
- Sourcing