Lithuania Food and Drink Report 2012

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 GDP growth forecast 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 Industry Data (local currency) ?? 2011 per capita food consumption: +5.55%; forecast compound annual growth rate to 2016:+4.16% ?? 2011 alcoholic drinks sales: +8.82%; forecast compound annual growth rate to 2016:+5.49% ?? 2011 soft drinks sales: +7.09%; forecast compound annual growth rate to 2016:+4.24% ?? 2011 mass grocery retail sales: +6.32%; forecast compound annual growth rate to 2016:+5.98%

Key Company 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, sales 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 GDP 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

Chapter 1 - Executive Summary

SWOT Analysis

Lithuania Food Industry SWOT

Lithuania Drink Industry SWOT

Lithuania Mass Grocery Retail Industry SWOT

Chapter 2 - Business Environment

BMI’s Core Global Industry Views

Table: Agricultural Commodity Prices

Table: Core Views Q

CEE Food & Drink Risk/Reward Ratings

Table: Central And Eastern Europe Food & Drink Risk/Reward Ratings Q

Lithuania’s Food and Drink Business Environment Rating

Macroeconomic Outlook

Table: Lithuania – Economic Activity

Table: Lithuania GDP By Expenditure US$ Terms Breakdown

Chapter 3 - Industry Forecast Scenario

Consumer Outlook

Food

Food Consumption

Table: Food consumption indicators

Confectionery

Table: Confectionery – Production Consumption and Trade – Historical Data & Forecasts

Processed Foods

Table: Processed Meat – Production Consumption and Trade – Historical Data & Forecasts

Table: Snack Food – Production Consumption and Trade – Historical Data & Forecasts

Table: Pasta – Production Consumption and Trade – Historical Data & Forecasts

Dairy

Table: Dairy – Production Consumption and Trade – Historical Data & Forecasts

Drink

Alcoholic Drinks

Table: Alcoholic Drink indicators

Table: Alcoholic Drinks – Production Consumption and Trade – Historical Data & Forecasts

Soft Drinks

Table: Soft Drink indicators

Table: Soft Drinks – Production Consumption and Trade – Historical Data & Forecasts

Hot Drinks

Table: Hot Drinks – Production Consumption and Trade – Historical Data & Forecasts

Mass Grocery Retail

Table: Retail indicators

Table D: Grocery Retail Sales By Format – Historical Data And Forecasts

Trade

Sectoral trade indicators

Chapter 4 - Food

Key Industry Trends and Developments

Interests in the Baltics Marred by Modest Returns

Market Overview

Food Consumption

Table: Lithuania – Consumption of Main Foodstuffs Per Capita (kg)

Food Processing

Leading Food Producers

Confectionery

Trade

Agriculture

Table: Oils and Fats – Production Consumption and Trade – Historical Data & Forecasts

Table: Frozen Fruit and Vegetables – Production Consumption and Trade – Historical Data & Forecasts

Chapter 5 - Drink

Key Industry Trends and Developments

Authorities to Ban Sales of ‘Strong Beer’

Foreign Players Remain Interested in Distribution Agreements

Multinationals Seeking Cheaper Production Locations

Market Overview

Alcoholic Drinks

Beer

Spirits

Soft Drinks

Hot Drinks

Chapter 6 - Mass Grocery Retail

Key Industry Trends and Developments

Lidl Eyeing Lithuanian Entry in

Maxima Feels the Pinch but Looks Ahead

Rimi Closes Outlets in Lithuania

Market Overview

Leading Retailers

Table : Structure of Lithuania's Mass Grocery Retail Market by Number of Outlets

Table : Structure of Lithuania's Mass Grocery Retail Market Sales Value by Format

Table : Lithuania Average Annual Sales Per Outlet By Format

Chapter 7 - Competitive Landscape

Key Players

Table: Key Players in Lithuania's Food Sector

Table: Key Players in Lithuania's Drink Sector

Table: Key Players in Lithuania’s Mass Grocery Retail Sector

Company Analysis

Food

Paulig Baltic AS

Vilniaus Duona Plius

Kraft Lietuva

Drink

KalnapilisTauro Grupe (KTG) (Royal Unibrew)

Stumbras

AB Alita

Agriculture

AB Rokiskio Suris

Mass Grocery Retail

Rimi Baltic AB

Maxima LT (Vilniaus Prekyba)

IKI Group

Chapter 8 - BMI Methodology

Food & Drink Business Environment Ratings

Ratings Methodology

Ratings System

Indicators

Table: Limits Of Potential Returns

Table: Risks To Realisation Of Potential Returns

Weighting

Table: Weighting

BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

BMI Food & Drink Forecasting And Sources

How We Generate Our Industry Forecasts

Sources

Related research categories

By sector: General drinks

By market: Lithuania (in Europe)