Lithuania Food and Drink Industry Analysis 2012

  • December 2013
  • -
  • Business Monitor International
  • -
  • 134 pages

Growing macroeconomic headwinds in Europe and the government's firm adherence to additional fiscal consolidation will see the Lithuanian economy come to a standstill in 2012, with our Gross Domestic Product growth projection recently lowered from 1.8% to just 0.8%. All of those factors are reflected in our modest consumer outlook. The already precarious economic picture is further compounded by the latest scandal and collapse of Lithuania's fifth-largest lender, Snoras Bank. Although a change of government in 2012 could presage a period of looser fiscal policy, Lithuania's poor finances mean that any stimulus measures will be short-lived and thus have little positive impact on consumer sentiment, especially given elevated unemployment levels.

Headline Market Data (local currency)
- 2011 per capita food consumption: +5.55%; projection compound annual growth rate to 2016:+4.16%
- 2011 alcoholic drinks revenues : +8.82%; projection compound annual growth rate to 2016:+5.49%
- 2011 soft drinks revenues : +7.09%; projection compound annual growth rate to 2016:+4.24%
- 2011 mass grocery retail revenues : +6.32%; projection compound annual growth rate to 2016:+5.98%

Key Firms Trends
Lidl Eyeing Lithuanian Entry in 2012 – German discounter Lidl is reportedly looking to launch its Lithuanian pilot store in Alytus in 2012. According to local media reports published in November 2011, by 2013 the firm is hoping to open outlets in the country's five biggest cities with populations of over 20,000. Lidl is clearly aiming to take advantage of the increased demand for economically priced goods, which has been supported by wider economic trends. However, the retailer will have to face strong competition posed by the few dominant domestic players led by Maxima.
Authorities to Ban Sales of ‘Strong Beer’ – According to local press, as of April 2012, revenues of beer containing more than 7.5% alcohol will be banned in Lithuania. The decision seems to be in line with the programme to address alcohol consumption in the country, with the ban mostly to affect strong locally sold beer that is sold in plastic bottles. However, consumers of Belgian strong beer will also be impacted.

Key Risks to Outlook
Downside Risks on a Number of Fronts – Economic developments, currently weighted firmly to the downside, represent a key risk to our consumer outlook, with the country’s Gross Domestic Product expected to post marginal growth at best in 2012. We also believe that any event that would shake up the sustainability of the euro would prove devastating for Lithuania's balance of payments position, while the government's decision to maintain the lita’s peg to the euro means the electorate will be forced to accept a lower standard of living. Moreover, as an increasing number of Lithuanians leave the workforce, the taxable base will only shrink further, putting significant strain on an already stretched social security system and therefore on the country’s economic performance and consumer confidence levels.

Table Of Contents

Executive Summary . 7
Industry SWOT Analysis . 8
Lithuania Food Industry Environment and Risk Analysis . 8
Lithuania Drink Industry Environment and Risk Analysis 9
Lithuania Mass Grocery Retail Industry Environment and Risk Analysis .. 10

Environment Overview 11
BMI’s Core World Market Views .. 11
Data : Agricultural Commodity Prices 13
Data : Core Views Q411 . 19
CEE Food and Drink Risk/Reward Ratings . 20
Data : Central And Eastern Europe Food and Drink Risk/Reward Ratings Q212 . 24
Lithuania’s Food and Drink Business Environment Rating .. 25

Macroeconomic Data 26
Data : Lithuania - Economic Activity .. 29
Data : Lithuania - Gross Domestic Product By Expenditure, USD Terms Breakdown .. 29

Market Projection Scenario 30
Consumer Outlook 30
Food. 33
Food Consumption . 33
Data : Food consumption indicators 34
Confectionery 34
Data : Confectionery - Production, Consumption and Trade - Historical Data and Projections .. 34
Processed Foods . 36
Data : Processed Meat - Production, Consumption and Trade - Historical Data and Projections .. 36
Data : Snack Food - Production, Consumption and Trade - Historical Data and Projections .. 37
Data : Pasta - Production, Consumption and Trade - Historical Data and Projections 39
Dairy . 40
Data : Dairy - Production, Consumption and Trade - Historical Data and Projections 41
Drink 45
Alcoholic Drinks . 45
Data : Alcoholic Drink indicators . 46
Data : Alcoholic Drinks - Production, Consumption and Trade - Historical Data and Projections 46
Soft Drinks . 48
Data : Soft Drink indicators . 49
Data : Soft Drinks - Production, Consumption and Trade - Historical Data and Projections 49
Hot Drinks . 51
Data : Hot Drinks - Production, Consumption and Trade - Historical Data and Projections 51
Mass Grocery Retail 52
Data : Retail indicators .. 54
Data D: Grocery Retail Sales By Format - Historical Data And Projections . 54
Trade .. 55
Sectoral trade indicators. 55
Food . 56

Key Market Trends and Developments . 56
Interests in the Baltics Marred by Modest Returns 56

Industry Analysis .. 56
Food Consumption . 56
Data : Lithuania - Consumption of Main Foodstuffs Per Capita (kg) .. 57
Food Processing . 57
Leading Food Producers 57
Confectionery 59
Trade 59
Agriculture . 60
Data : Oils and Fats - Production, Consumption and Trade - Historical Data and Projections .. 61
Data : Frozen Fruit and Vegetables - Production, Consumption and Trade - Historical Data and Projections 63
Drink 65

Key Market Trends and Developments . 65
Authorities to Ban Sales of ‘Strong Beer’ .. 65
Foreign Players Remain Interested in Distribution Agreements .. 65
Multinationals Seeking Cheaper Production Locations .. 66

Industry Analysis .. 67
Alcoholic Drinks . 67
Beer .. 67
Spirits 68
Soft Drinks . 69
Hot Drinks . 70
Mass Grocery Retail .. 71

Key Market Trends and Developments . 71
Lidl Eyeing Lithuanian Entry in 2012 .. 71
Maxima Feels the Pinch, but Looks Ahead 71
Rimi Closes Outlets in Lithuania 72

Industry Analysis .. 72
Leading Retailers 73
Data : Structure of Lithuania's Mass Grocery Retail Industry by Number of Outlets . 75
Data : Structure of Lithuania's Mass Grocery Retail Industry - Sales Value by Format .. 75
Data : Lithuania - Average Annual Sales Per Outlet By Format, 2011 .. 76

Competition Overview .. 77
Key Players .. 77
Data : Key Players in Lithuania's Food Segment 77
Data : Key Players in Lithuania's Drink Segment .. 78
Data : Key Players in Lithuania’s Mass Grocery Retail Segment 79

Company Profiles . 81
Food . 81
Paulig Baltic AS .. 81
Vilniaus Duona Plius 82
Kraft Lietuva . 83
Drink . 84
Kalnapilis-Tauro Grupe (KTG) (Royal Unibrew) .. 84
Stumbras . 85
AB Alita .. 86
Agriculture . 87
AB Rokiskio Suris .. 87
Mass Grocery Retail . 88
Rimi Baltic AB . 88
Maxima LT (Vilniaus Prekyba) 90
IKI Group .. 92
BMI Methodology 93
Food and Drink Business Environment Ratings 93
Ratings Methodology 93
Ratings System . 93
Indicators 93
Data : Limits Of Potential Returns 94
Data : Risks To Realisation Of Potential Returns .. 95
Weighting 96
Data : Weighting 96
BMI Food and Drink Market Glossary 97
Food and Drink .. 97
Mass Grocery Retail . 97
BMI Food and Drink Projection ing And Sources . 99
How We Generate Our Market Projections 99
Sources ..100

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