Serbia Food & Drink Report Q1 2014 - New Study Released

We have adjusted down our forecast for private consumption and investment growth for 2013 and 2014 in Serbia as disappointing Q213 results showed a recovery is taking longer than we expected. Domestic demand is still struggling as the deleveraging of the household sector impedes private consumption, which is further hampered by record high unemployment. Weak credit growth continues to weigh on private spending.

Headline Industry Data (local currency):

* 2013 per capita food consumption: +3.2%; forecast CAGR 2013 to 2017: +2.4%.
* 2013 alcoholic drinks value sales: +3.0%; forecast CAGR 2013 to 2017: +2.2%.
* 2013 soft drinks value sales: +11.5%; forecast CAGR 2013 to 2017: +9.6%.
* 2013 mass grocery retail sales: +7.5%; forecast CAGR 2013 to 2017: +5.0%.

Full Report Details at
- http://www.fastmr.com/prod/754650_serbia_food_drink_report_q1_2014.aspx?afid=301

Key Industry Trends

Sojaprotein Moves To Higher Value: In autumn 2013, the Balkans' largest soy bean processor, Serbia based Sojaprotein, announced that it is to borrow EUR110mn from Societe Generale and UniCredit for refinancing as the company shifts to higher value products. The financing will support the transition from soybean meal for animal feeds to higher margin, soy protein concentrate.

Delhaize Incurs Write Down On Serbian Business: In November 2013 Belgian based retailer Delhaize announced a second writedown on its operations in the Balkans, pushing the retailer to an unexpected third quarter loss. Delhaize said that it would write off EUR195mn, mainly on its business in Serbia, where a weak economy and high unemployment have contributed to a decline in sales and undermined short and mid-term expectations for its business.

Key Risks To Outlook

It is possible that inflation remains elevated for longer than we currently expect, further eroding households' purchasing power, while the government's efforts to improve investment and boost jobs take longer to bear fruition. In this case, we would revise down our forecast for private consumption over our forecast horizon.

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