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Belarus Food and Drink Report Q3 2008Published by: Business Monitor International Published: Jul. 22, 2008 - 37 Pages Table of Contents
AbstractDespite its reputation as a poor place to do business, the Belarusian food and drink sector has been catching theeye of foreign investors, as discussed in BMI’s brand new quarterly Belarus Food & Drink Report. The beermarket in particular has been attracting considerable attention, thanks to its strong growth potential. Likealmost all industries in Belarus, there is considerable state involvement in the beer sector, with the Presidenthaving described its control as a matter of ‘food security.’ Nevertheless, some companies have been dippingtheir toes in. First, in January 2008, Baltic Beverages Holding (BBH) reported that it will invest aroundUS$6mn throughout 2008 in the Belarusian brewery Olivaria, in which it holds a 30% stake. According toBBH these investments will primarily be in distribution, production development and staff training. BBH hassaid that its strategy for Belarus is to secure market leadership, as well as increasing exports, with Ukraine andRussia the main target countries.Then, in May 2008, Dutch brewing giant Heineken announced its acquisition of the Rechitsa brewery, whichhas now given it a production share of 24% in the local beer market. This deal represents a EUR6.4mn(US$9.9mn) investment by Heineken, which will eventually hold a 51% stake in the brewer. Located in thetown of Rechitsa 280km from Minsk, the brewery has a technical capacity of 525,000hl and last year sold285,000hl, representing a national production share of 8%. Rechitsa also operates a maltery with a 10,000-tonne capacity. This followed Heineken's acquisition of Syabar brewery in December 2007. The beer market is expected to experience the strongest growth in terms of the alcoholic drinks sub-sector.According to BMI forecasts, sales of alcoholic drinks are forecast to increase by 37.5% in value terms between2007 and 2012, reaching US$426.9mn by the end of the forecast period. Per capita alcohol consumption willrise significantly by 41% to reach US$45.2, as disposable incomes rise and consumers switch over to highervalue drinks. A move away from homemade and illegally produced drinks will also play a major role in thisincrease. With disposable incomes rising and more consumers switching from traditional spirits to beer, thiswill be a major driver behind the growth of this sub-sector. A major driver behind all growth in the food and drink sector will be the country’s positive economic outlook.Going forward, we anticipate that GDP growth will come in at 7.8% this year, down only slightly from 8.2% in2007. We see growth remaining robust throughout our five-year forecast period, averaging 7.1%. During thisperiod foreign investment is expected to be a major driver of growth, as the political leadership had adopted amore positive attitude towards foreign investors, and there have been amendments to legislation allowing forthe opening of previously heavily state-controlled sectors. With international food and drink operatorscontinuing to look for new emerging markets to invest in as a means of pursuing growth, the Belarusian marketshould continue to benefit from this trend. Get Full Details About This Report >> |
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