Ukraine Food and Drink Report Q4 2012

In our view, the debt hangover from a credit boom and the possibility of higher inflation could be threats to consumer spending over the rest of 2012. Additionally, Ukraine’s GDP per capita is expected to remain one of the lowest in Europe over the decade ahead. Given the pace of deceleration and our expectations for a weaker H212, we are revising down our 2012 real GDP forecast for Ukraine, as a result of a downwards adjustment to the country’s export growth forecast. While there is still enormous unrealised potential in terms of political reform and economic growth, without institutional and economic reform, Ukraine’s current economic growth model will prove unsustainable over the coming 10 years. Headline Industry Data (local currency)

? 2012 per capita food consumption = +7.9%; five-year forecast to 2016 = +51.6% ? 2012 alcoholic drinks value sales = +12.6%; five-year forecast to 2016 = +64.4% ? 2012 soft drinks value sales = +12.6%; five-year forecast to 2016 = +61.4% ? 2012 mass grocery retail = +10.7%; five-year forecast to 2016 = +69.4%

Key Company Trends Ukraine Wine Market Demonstrates Potential: In August 2012, Australian wine group Accolade Wines announced the launch of its Hardy’s wine brand in the Ukrainian market. The firm confirmed that local producer Olimp will act as distributor for the brand, and that initially five varieties of wine will be made available. The Ukrainian wine market is set on a strong growth trajectory. Alcohol consumption in the country is historically dominated by spirits, and while we expected continued momentum in this sector, we see an even greater opportunity within both wine and beer. In 2011, consumption of wine stood at around 10.1 litres per capita, but over the next five years we expect per capita consumption to increase by 27% to reach 12.8 litres.

Prevalence Of Informal Retailing Leaves Room For Formalisation: There is no question that the past few years have been difficult, but Ukraine in summer 2012 has started to look better on the consumer side, with private household expenditure up strongly since the start of 2011. We still believe that organised retail will begin offering up good opportunities in the not too distant future. As independent stores make up the bulk of total food spending in Ukraine, this suggests substantial room for growth given that Ukrainian organised retail has not been formalising as quickly as many other economies in Central and Eastern Europe. Ukraine Food & Drink Report Q4 2012 © Business Monitor International Ltd Page 8 Key Risks To Outlook

Overly Optimistic Government Growth Forecasts: We remain particularly cautious concerning Ukraine’s fiscal situation due to the optimistic growth forecasts upon which the budget is predicated. The government expects real GDP growth of 3.7% this year, and has planned the 2013 budget around expected growth of 4.5%. However, economic activity is slowing in Ukraine, and as a result, a revenue undershoot remains highly probable, in our opinion. We also note that inflation has come in significantly lower than government forecasts, weakening government revenues as a result. We therefore believe economic activity will significantly undershoot government estimates and are forecasting real GDP growth of 2.0% in 2012 and 0.9% in 2013.

Table of contents

Chapter 1 - BMI Industry View

Chapter 2 - SWOT Analysis

Ukraine Food Industry SWOT

Ukraine Drink Industry SWOT

Ukraine Mass Grocery Retail Industry SWOT

Chapter 3 - Business Environment

BMI’s Core Global Industry Views

Table: Core Views

CEE Food & Drink Risk/Reward Ratings

Table: Food & Drink Risk/Reward Sub-Factor Ratings, Q (scores out of )

Table: CEE Food & Drink Risk/Reward Ratings, Q

Ukraine’s Food & Drink Business Environment Ratings

Macroeconomic Outlook

Table: Economic Activity

Chapter 4 - Industry Forecast Scenario

Consumer Outlook

Food

Food Consumption

Table: Food Consumption Indicators – Historical Data & Forecasts, -

Confectionery

Table: Confectionery Value/Volume Sales – Historical Data & Forecasts, -

Prepared Food

Table: Meat, -

Table: Jams & Jellies, -

Table: Pasta, -

Table: Snack Foods, -

Dairy

Table: Dairy, -

Drink

Alcoholic Drinks

Table: Alcoholic Drinks Value/Volume Sales – Historical Data & Forecasts, -

Soft Drinks

Table: Soft Drinks Value/Volume Sales – Historical Data & Forecasts, -

Hot Drinks

Table: Hot Drinks Value Sales – Historical Data & Forecasts, -

Mass Grocery Retail

Table: Mass Grocery Retail Sales By Format – Historical Data & Forecasts, -

Table: Grocery Retail Sales By Format (%)

Trade

Table: Trade Indicators – Historical Data & Forecasts, -

Chapter 5 - Food

Key Industry Trends And Developments

Cheese Dispute Benefits Danone

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Nestlé Ukraine Outperforms Rest Of Europe

Agriculture Continues To Attract Interest

Government Calls For Greater Investment Into Agriculture

Dairy Industry Consolidates And Changes Direction

Market Overview

Food Processing

Key Players

Confectionery

Trade

Agriculture

Chapter 6 - Drink

Key Industry Trends And Developments

Ukraine Wine Market Demonstrates Potential

Budweiser Launched In Ukraine

Anadolu Efes Looks For Acquisitions

Oasis CIS Seeks Expansion Through Acquisition

The Beer Industry Seems To Be Growing Against The Odds

Ukrainian Spirits Majors Targeting Russia

Market Overview

Alcoholic Drinks

Beer

Wine

Spirits

Soft Drinks

Hot Drinks

Chapter 7 - Mass Grocery Retail

Key Industry Trends And Developments

Prevalence Of Informal Retailing Leaves Room For Formalisation

Ukraine Consumers Turn To MGR Outlets

Retail Space Expanding Despite Economic Adversity

Investment Into Hypermarkets Continues

Supermarket Expansion Also On Cards

Market Overview

Leading Retailers

Table: Mass Grocery Retail Market By Number Of Outlets, -

Table: Average Annual Sales By Outlet Type,

Table: Mass Grocery Retail Sales By Format , -

Chapter 8 - Competitive Landscape

Table: Key Players In Ukraine’s Food Sector

Table: Key Players In Ukraine’s Drink Sector

Table: Key Players in Ukraine’s Mass Grocery Retail Industry

Chapter 9 - Company Monitor

Food

Ukrproduct

Myronivsky Hliboproduct (MHP)

Danone-Unimilk (Halakton)

Roshen

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Konti

Astarta-Kyiv

Drink

Sun InBev Ukraine

Slavutich Carlsberg (Baltic Beverages Holding Ukraine)

Obolon

Odessa Champagne Factory

Nemiroff

Mass Grocery Retail

Fozzy Group

Billa

ATB Market

Auchan

Chapter 10 - Country Snapshot

Table: Ukraine’s Population By Age Group, - (‘)

Table: Ukraine’s Population By Age Group, - (% of total)

Table: Ukraine’s Key Population Ratios, -

Table: Ukraine’s Rural And Urban Population, -

Chapter 11 - Risk/Reward Ratings Methodology

Table: Rewards

Table: Risks

Weighting

Table: Weighting

Chapter 12 - BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

Chapter 13 - BMI Food & Drink Forecasting & Sourcing

How We Generate Our Industry Forecasts

Sourcing

Tweet

Related research categories

By sector: General drinks

By market: Ukraine (in Europe)