Greece Food & Drink

One of the most interesting stories to be highlighted in this quarter's update of the Greece Food & Drink Report relate to the allegations of corruption and price fixing, which are said to be responsible for the high food prices in the country. The affair is still murky but according to most accounts, local dairy company Mevgal reported to the police that it was being blackmailed by a man allegedly linked to the Commission of Fair Trading, the country's main competition and consumer watchdog. The country has historically high food prices despite being one of the poorest countries in the 12-country eurozone monetary union and among the pre-accession EU-15 group of countries. Various studies have claimed shocking rates of corruption for an EU country. International watchdog Transparency International claims the country is the most corrupt in the eurozone. The World Bank has suggested that illegal payments may account for EUR330mn. Indeed, Greece has fallen down the ranks in BMI's Business Environment Ranking over the past year, and now sits in sixth place - alongside Russia - for the second quarter running. Following a series of significant changes over the past six months, BMI's third quarter Retail Business Environment Rankings (BER) has witnessed a slowdown in movement in the Central and Eastern Europe (CEE) region.

Greece is given the highest rating for per-capita consumption, alongside Hungary and Slovenia, with an average rate of US$1,449.9 in 2005. Overall, food consumption in Greece is forecast to reach US$17bn by 2010. The country continued to attract attention from the leading multinational food companies this quarter, as Unilever announced plans to acquire the remaining 33% of share that it does not currently own within the Greek food company Elais-Unilever. It is expected that the offer will be actioned through the subsidiary Unilever Hellas, followed by the de-listing of Elais-Unilever company from the Athens Stock Exchange. The company is reportedly offering US$31.4 for each share that it does not already own.

Greece is following consumer trends witnessed in other countries in the EU, where shopping is a one-stop activity catered for by hypermarkets and supermarkets, either out of town or in shopping malls. Price-conscious lower-income consumers shop in discount stores and consumers needing 'distress purchases' shop in the convenience stores that are open all day. The co-operatives appear to be caught between the two extremes of the large and small format competitors. Despite the fact that they have held their own through combined buying power, they are likely to struggle to maintain any real growth. Overall, mass grocery retail (MGR) sales development will be expected to benefit from rising disposable incomes with forecast growth of 12.68% between 2004 and 2010. Greece shows potential for retail investment, growth and success in terms of its long-term political outlook, particularly in comparison to countries such as Slovakia and the Ukraine, which occupy the opposite end of this spectrum. In fact, there is mounting speculation that the next national elections in Greece will be held in the autumn of 2007 and not as currently scheduled in spring 2008. Some commentators believe that it could be as early as spring 2007.