Report Published: "Germany Food & Drink Report Q3 2013"

From: Fast Market Research, Inc.
Published: Mon Jun 17 2013

While weak economic data out of Germany support our below-consensus estimate for real GDP growth in 2012, the collapse in business and consumer confidence has prompted us to revise down our 2013 GDP projection, to 0.8% from 1.3%. Perhaps more important than the headline rate of growth is the changing shape of GDP, which we expect to become increasingly dominated by domestic demand over the next few years. The worst now appears to be over for German households, which is likely to translate into positive private consumption growth in 2013, and thus increased food and drink spend.

Headline Industry Data (local currency)

* 2013 per capita food consumption = +3.3%; forecast to 2017 =
* 2013 alcoholic drink value sales = +1.0%; forecast to 2017 = +5.6%.
* 2013 soft drink value sales = +3.7%; forecast to 2017 = +21.0%.
* 2013 mass grocery retail sales = +5.9%; forecast to 2017 = +36.6%.

Full Report Details at

Key Company Trends

Barilla Divests Lieken: In February 2013, Italian food giant Barilla announced the sale of its German bakery business Lieken to Czech Republic-based Agrofert. The financial details of the transaction were not disclosed. The deal, once approved by the relevant regulatory authorities, will allow Barilla to continue focusing on its core business. The transaction marks Agrofert's first venture into the German bakery products market.

Metro FY12 Profit Declines On Poor Market Demand: In spring 2013, German retailer Metro Group posted a 26.7% year-on-year decline in its FY12 net profits to EUR717mn (US$926mn). During the period, the company's earnings before interest and taxes fell to EUR1.98bn (US$2.55bn) from EUR2.4bn (US $3.1bn) registered in FY11. The retailer said it expects its operating profits to fall in FY13 due to a difficult consumer environment caused by the economic slowdown in Europe.

Key Risks To Outlook

Domestic And External Downside: We see downside risks to our 2013 growth forecasts coming from domestic and external factors. On the domestic front, uncertainty surrounding policy beyond the September 2013 general election could see domestic demand stagnate this year, while the outlook for German exports is clouded by questions over Asian demand and the sustainability of China's economic stimulus. The trajectory of the euro poses another risk to our positive net exports view. We believe that persistent problems with periphery states of the eurozone will keep the currency on the back foot over the next few years, but there is the possibility that as tail risks to the currency union dissipate, the euro stages a relief rally, hurting Germany's terms of trade in the process.

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Contact Name: Bill Thompson
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