Germany Food and Drink

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					Germany Food and Drink Report Q2 2012
Published : March 2012                         No. of Pages : 109                            Price: US$530




The ever-deepening eurozone debt crisis is proving a major challenge to Germany’s economic growth
model. Further escalation of the crisis, which could see a sovereign or a financial institution default, may
tip the balance and result in a major recession in Europe’s biggest economy, which almost certainly
would drag global growth into recession as well. For the time being we continue to hold to our
‘muddlethrough’
scenario for the eurozone despite acknowledging enormous risks of a break-up of the European
monetary union. Somewhat more encouraging for Germany’s longer-term growth outlook is the
improvement witnessed in the domestic demand picture. Key to the improved performance of German
households has been the continued decline in the unemployment rate, which fell to a post-reunification
low of 6.8% in December 2011.


Headline Industry Data (local currency)
2012 per capita food consumption = +2.5%; forecast to 2016 = +15.5%
2012 alcoholic drink sales = 0.8%; forecast to 2016 = +3.6%
2012 soft drink sales = +2.8% ; forecast to 2016 = +15.6%
2012 mass grocery retail sales = +4.5%; forecast to 2016 = +28.4%

Key Company Trends
Competition In German Ice Cream Heating Up: In early 2012 there were signs of increased competitive
activity in Germany’s ice cream sector. The country’s largest dairy, DMK, announced that its ice cream
unit would now operate as a standalone unit to be named DMK Eis. The firm said the move would allow
it to innovate more quickly, with faster decision making and increased flexibility. DMK earlier had failed
to acquire local rival Durigon after talks broke down. Durigon was subsequently acquired in November
2011 by UK-based ice cream maker R&R, which has been expanding aggressively across Western
Europe.

German Wine Sector Needs To Consolidate To Compete: In December 2011, two German wine
cooperatives, Deutsches Weintor and Niederkirchener Weinmacher, completed a merger to become
the largest wine cooperative in the Pfalz region of Germany. The two groups have been cooperating in
areas such as bottling and purchasing and will now be fully integrated after the deal was overwhelmingly
approved by the groups’ members. The move creates a firm with revenues of around EUR35mn and can
be seen as a reaction to the highly competitive nature of the German market, where sales are growing but
price sensitivity is high. The combined group has highlighted the potential within the German market
through increasing distribution while also underlining the export opportunities that exist for the
increasingly well-regarded German wine sector.

Key Risks To Outlook
Eurozone Uncertainty: We caution that a sharper deceleration of the global economy 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 a particular risk in light of signs of slowing demand in emerging market economies,
such as India and China, upon which German exporters have grown increasingly reliant in recent years.
Germany Food and Drink Market

Table of Content

BMI Industry View 7
SWOT Analysis . 9
Germany Food Industry SWOT .. 9
Germany Drink Industry SWOT ... 10
Germany Mass Grocery Retail Industry SWOT ... 11
Business Environment .. 12
BMI’s Core Global Industry Views ... 12
Table: Agricultural Commodity Prices 14
Table: Core Views Q212 .. 23
Western Europe Risk/Reward Ratings .. 24
UK And Germany Top BMI’s Western Europe Risk/Reward Ratings .. 24
Table: Western Europe Food & Drink Risk/Reward Ratings Q212 . 26
Germany Food & Drink Business Environment Rating 27
Macroeconomic Outlook ... 28
Table: GDP By Expenditure 31
Industry Forecast Scenario ... 32
Consumer Outlook 32
Food.. 33
Food Consumption ... 33
Table: Food Consumption Indicators – Historical Data & Forecasts . 34
Confectionery... 34
Table: Confectionery Value/Volume Sales – Historical Data & Forecasts .. 34
Prepared Food . 35
Table: Frozen Fruit & Vegetables ... 36
Table: Snack Foods . 37
Table: Pasta . 41
Table: Dairy 42
Table: Meat . 46
Table: Fish ... 48
Table: Oils & Fats ... 50
Drink . 55
Soft Drinks And Bottled Water . 55
Table: Soft Drink Value Sales – Historical Data & Forecasts . 55
Alcoholic Drinks .. 56
Table: Alcoholic Drink Value/Volume Sales – Historical Data & Forecasts ... 58
Hot Drinks ... 58
Table: Hot Drinks Value Sales – Historical Data & Forecasts 59
Mass Grocery Retail . 60
Table: Mass Grocery Retail Sales By Format – Historical Data & Forecasts . 60
Trade 61
Table: Food & Drink Trade Balance – Historical Data & Forecasts .. 61
Food . 62
Key Industry Trends And Developments ... 62
Competition In Ice Cream Heating Up 62
Halloren Looking Outside Of Germany For Chocolate Growth .. 63
Convenience Hits The Spot .. 64
Organic Food Receives Boost After Dioxin Food Scandal .. 65
Arla’s International Ambitions Come To Fruition With Hansa-Milch . 65
DMK Urges Further Dairy Sector Consolidation 66
Katjes Looking For Stronger International Growth . 67
Bakeries Hit Hard Times . 68
Dr Oetker Sells Onken Brand .. 69
Market Overview .. 69
Food Sector . 69
Organics .. 70
Dairy 71
Drink 73
Key Industry Trends And Developments ... 73
Wine Sector Needs To Consolidate To Compete .. 73
Consolidation Moves In Soft Drinks 74
Carlsberg Sells German Brewery, Further Consolidation Likely 75
Merit Of Coca-Cola Enterprises Expanding 76
Winemakers Eye Asian Markets ... 78
Market Overview .. 78
Soft Drinks ... 78
Alcoholic Drinks .. 79
Mass Grocery Retail ... 80
Key Industry Trends And Developments ... 80
Metro CEO Bows to Pressure; More Radical Reorganisation Needed 80
Tengelmann Distances Itself From A&P In US 81
Grocery Retail Competition Probe Launched .. 82
Expansion Across Sectors To Hedge Bets 82
Market Overview .. 83
Table: Structure Of Germany’s Mass Grocery Retail Market – Estimated Number Of Outlets ... 84
Table: Structure Of Germany’s Mass Grocery Retail Market – Sales Format By Value (US$bn) ... 85
Table: Structure Of Germany’s Mass Grocery Retail Market – Sales Format By Value (EURmn) . 85
Table: Annual Average Sales Per Outlet By Format – 2009 85
Competitive Landscape . 86
Table: Key Players in Germany’s Food Sector 86
Table: Key Players in Germany’s Drink Sector ... 88
Table: Key Players In Germany’s Mass Grocery Retail Sector ... 89
Company Monitor ... 91
Food.. 91
Oetker Group ... 91
DMK 93
Haribo . 95
Lieken Group ... 96
Drink . 97
Emig GmbH & Co KG (GerberEmig Group) ... 97
Radeberger Group (Oetker Group).. 98
Anheuser-Busch InBev Germany . 99
Mass Grocery Retail 100
Lidl Group ..100
Rewe Group 101
BMI Methodology . 103
Risk/Reward Ratings Methodology 103
Table: Rewards ...103
Table: Risks 104
Weighting .104
Table: Weighting 104
BMI Food & Drink Industry Glossary . 105
Food & Drink ..105
Mass Grocery Retail 105
BMI Food & Drink Forecasting & Sourcing ... 107
How We Generate Our Industry Forecasts ..107
Sourcing ..108

				
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Description: The ever-deepening eurozone debt crisis is proving a major challenge to Germany’s economic growth model. Further escalation of the crisis, which could see a sovereign or a financial institution default, may tip the balance and result in a major recession in Europe’s biggest economy, which almost certainly would drag global growth into recession as well. For the time being we continue to hold to our ‘muddlethrough’ scenario for the eurozone despite acknowledging enormous risks of a break-up of the European monetary union. Somewhat more encouraging for Germany’s longer-term growth outlook is the improvement witnessed in the domestic demand picture. Key to the improved performance of German households has been the continued decline in the unemployment rate, which fell to a post-reunification low of 6.8% in December 2011.