Germany Food and Drink Industry Update Quarter 2 2012

  • February 2014
  • -
  • Business Monitor International
  • -
  • 142 pages

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 Market Data (local currency)

.. 2012 per capita food consumption = +2.5%; projection to 2016 = +15.5%

.. 2012 alcoholic drink revenues = 0.8%; projection to 2016 = +3.6%

.. 2012 soft drink revenues = +2.8% ; projection to 2016 = +15.6%

.. 2012 mass grocery retail revenues = +4.5%; projection to 2016 = +28.4%

Key Firms Trends
Competition In German Ice Cream Heating Up: In early 2012 there were signs of increased competitive
activity in Germany’s ice cream segment . 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 take over local rival Durigon after talks broke down. Durigon was subsequently take over d in November
2011 by UK-based ice cream maker R&R, which has been grow ing aggressively across Western
Europe.

German Wine Segment 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 agreement was overwhelmingly
approved by the groups’ members. The move creates a firm with revenues of around Euros 35mn and can
be seen as a reaction to the highly competitive nature of the German industry, where revenues are growing but
price sensitivity is high. The combined group has highlighted the potential within the German industry
through increasing distribution while also underlining the export opportunities that exist for the
increasingly well-regarded German wine segment .

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 industry economies,
such as India and China, upon which German exporters have grown increasingly reliant in recent years.

Table Of Contents

BMI Market View 7
Industry SWOT Analysis . 9
Germany Food Industry Environment and Risk Analysis 9
Germany Drink Industry Environment and Risk Analysis . 10
Germany Mass Grocery Retail Industry Environment and Risk Analysis . 11

Environment Overview 12
BMI’s Core World Market Views . 12
Data : Agricultural Commodity Prices 14
Data : Core Views Q212 23
Western Europe Risk/Reward Ratings 24
UK And Germany Top BMI’s Western Europe Risk/Reward Ratings 24
Data : Western Europe Food and Drink Risk/Reward Ratings Q212 . 26
Germany Food and Drink Business Environment Rating 27

Macroeconomic Data . 28
Data : Gross Domestic Product By Expenditure 31

Market Projection Scenario . 32
Consumer Outlook 32
Food 33
Food Consumption . 33
Data : Food Consumption Indicators - Historical Data and Projections . 34
Confectionery. 34
Data : Confectionery Value/Volume Sales - Historical Data and Projections 34
Prepared Food . 35
Data : Frozen Fruit and Vegetables . 36
Data : Snack Foods . 37
Data : Pasta . 41
Data : Dairy 42
Data : Meat . 46
Data : Fish . 48
Data : Oils and Fats . 50
Drink . 55
Soft Drinks And Bottled Water . 55
Data : Soft Drink Value Sales - Historical Data and Projections . 55
Alcoholic Drinks 56
Data : Alcoholic Drink Value/Volume Sales - Historical Data and Projections . 58
Hot Drinks . 58
Data : Hot Drinks Value Sales - Historical Data and Projections 59
Mass Grocery Retail . 60
Data : Mass Grocery Retail Sales By Format - Historical Data and Projections . 60
Trade 61
Data : Food and Drink Trade Balance - Historical Data and Projections 61
Food . 62

Key Market 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 Segment Consolidation 66
Katjes Looking For Stronger International Growth . 67
Bakeries Hit Hard Times . 68
Dr Oetker Sells Onken Brand 69

Market Overview 69
Food Segment . 69
Organics 70
Dairy 71
Drink 73

Key Market Trends And Developments . 73
Wine Segment 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 Industries . 78

Market Overview 78
Soft Drinks . 78
Alcoholic Drinks 79
Mass Grocery Retail . 80

Key Market Trends And Developments . 80
Metro CEO Bows to Pressure; More Radical Reorganisation Needed 80
Tengelmann Distances Itself From AandP In US 81
Grocery Retail Competition Probe Launched 82
Expansion Across Segments To Hedge Bets 82

Market Overview 83
Data : Structure Of Germany’s Mass Grocery Retail Industry - Estimated Number Of Outlets . 84
Data : Structure Of Germany’s Mass Grocery Retail Industry - Sales Format By Value (US$bn) . 85
Data : Structure Of Germany’s Mass Grocery Retail Industry - Sales Format By Value (EURmn) . 85
Data : Annual Average Sales Per Outlet By Format - 2009 85

Competition Overview . 86
Data : Key Players in Germany’s Food Segment 86
Data : Key Players in Germany’s Drink Segment . 88
Data : Key Players In Germany’s Mass Grocery Retail Segment . 89
Company Monitor . 91
Food 91
Oetker Group . 91
DMK 93
Haribo . 95
Lieken Group . 96
Drink . 97
Emig GmbH and 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
Data : Rewards .103
Data : Risks 104
Weighting .104
Data : Weighting 104
BMI Food and Drink Market Glossary . 105
Food and Drink 105
Mass Grocery Retail 105
BMI Food and Drink Projection ing and Sourcing . 107
How We Generate Our Market Projections 107
Sourcing 108

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