Ukraine Food and Drink Report Q3 2009

Publication Date	July 2009
Publisher	Business Monitor
Product Type	Report
Pages	91
ISBN Number	1749-303X
Product Code	BMI02633

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Summary

In BMI's Food and Drink Business Environment rankings for Q309, Ukraine ranks 10th out of 14 major CEE markets, having occupied the last position in Q408 and 12th in Q209. The improvement of Ukraine's position is based more on the more serious worsening of absolute scores of other countries, rather than on a significant positive change in the Ukrainian operating environment. In fact, Ukraine has also been badly hit by the global economic crisis, and we believe Ukraine's economy is teetering on the brink of a doubledigit contraction. Although we have pencilled in a decrease in real GDP of 7.2% in 2009, we caution that risks remain weighted heavily to the downside, and do not rule out the possibility of growth falling below -10%. Additionally, its currency recently plummeted below UAH10.0/1US$, with further depreciation likely, which will be negatively reflected in US dollar values of its food and drinks markets as well as the country's attractiveness as a destination for food and drinks , and in terms of mass grocery retail (MGR) investments by foreign players.

The above factors, as well as the challenges posed to domestic players by the country's recent accession to the World Trade Organisation (WTO), will likely result in some industry consolidation over the coming months. For example, local press recently reported that Ukrainian sugar refineries were potentially facing closure amid increasing sugar imports and a drop in the acreage devoted to sugar beet production. Similarly, private equity fund Russia Partners - a subsidiary of US-based private equity group Siguler Guff & Company - recently reported that it is considering a move for Ukraine-based dairy company Milkiland, one of the country's biggest dairy companies, with an estimated annual turnover around US$180mn. Bearing in mind that the company has six dairy plants across Ukraine and the fact that the country has a population in excess of 45mn, Russia Partners will no doubt look to use its managerial and financial expertise to push up turnover, if it is able to strike a deal with the dairy company. However, according to research firm Proteus Insight, adverse economic conditions have already led to a fall in dairy consumption across a number of Central and Eastern Europe (CEE) and Commonwealth of Independent States (CIS) countries, including Ukraine. In the meantime, other local dairy producers, such as Ukrproduct, are contending with falling profits, in the face of lower prices of skimmed milk powder.

In the MGR sector, recessionary pressures are likely to boost the performance of the discount and privatelabel goods during the current year, bringing down overall food and drinks values. Additionally Ukrainebased hypermarket chain Karavan's recent talks with Germany-based discount MGR Lidl fuelled speculation that the latter is looking to venture into the Ukrainian market. Lidl had previously bought and sold a plot of land in the country, without making its entry at the time. Its potential entry would further increase pressure on prices, challenging the strong position of current leading discount retailers, including ATB, Intermarket's Barvinok and Fozzy's Fora.

Content

Executive Summary
SWOT Analysis
Ukraine Food Industry SWOT
Ukraine Drink Industry SWOT
Ukraine Mass Grocery Retail Industry SWOT
Business Environment
CEE Food & Drink Business Environment Ratings
Ukraine's Food & Drink Business Environment Ratings
Macroeconomic Outlook
Food
Industry Forecast Scenario
Food Consumption
Confectionery
Trade
Industry Developments
Market Overview
Food Processing
Key Players
Confectionery
Trade
Agriculture
Dairy
Drink
Industry Forecast Scenario
Alcoholic Drinks
Soft Drinks
Hot Drinks
Industry Developments
Market Overview
Alcoholic Drinks
Beer
Wine
Spirits
Soft Drinks
Hot Drinks
Mass Grocery Retail
Industry Forecast Scenario
Industry Developments
Market Overview
Leading Players
Competitive Landscape
Key Players
Food & Drink
Mass Grocery Retail
Company Analysis
Food
Ukrproduct
Halakton (Unimilk)
Roshen
Konti
Drink
InBev (Sun InBev)
Baltic Beverages Holding Ukraine (Slavutich Carslberg)
Obolon
Odessa Champagne Factory
Mass Grocery Retail
Fozzy Group
Billa
ATB Market
Appendix
Commodity Price Forecasts
Corn
Soybean
Rice
Wheat
Cocoa
Coffee
Milk
Sugar
Country Snapshot: Ukraine Demographic Data
Section 1: Population
Section 2: Education & Healthcare
Section 3: Labour Market & Spending Power
Food & Drink Business Environment Ratings
Ratings Methodology
Ratings Overview
Ratings System
Indicators
Limits of Potential Returns
Risks to Realisation of Potential Returns
Weighting
Weighting
BMI Food & Drink Industry Glossary
Food & Drink
Mass Grocery Retail
BMI Food & Drink Forecasting & Sourcing
How We Generate Our Industry Forecasts
Sourcing
List of Tables
- Table: Emerging Europe Food & Drink Business Environment Ratings Q3 2009
- Table: Ukraine - Economic Activity
- Table: Ukraine Food Consumption Indicators - Historical Data & Forecasts
- Table: Ukraine Confectionery Value/Volume Sales (US$Mn, Unless Otherwise Stated) - Historical Data & Forecasts
- Table: Ukraine Food, Drink & Tobacco Trade Indicators (US$Mn) - Historical Data & Forecasts
- Table: Ukraine Alcoholic Drinks Value/Volume Sales - Historical Data & Forecasts
- Table: Ukraine Soft Drinks Value/Volume Sales - Historical Data & Forecasts
- Table: Ukraine Hot Drinks Sector Value/Volume Sales (US$Mn) - Historical Data & Forecasts
- Table: Ukraine - Volume Consumption of Soft Drinks by Category (Mn Litres)
- Table: Ukraine - Value Consumption of Soft Drinks by Category (US$Mn)
- Table: Ukraine Mass Grocery Retail Value Sales by Format (US$Bn) - Historical Data & Forecasts
- Table: Ukraine Grocery Retail Sales by Format (%) - Historical Data & Forecasts
- Table: Structure of The Ukrainian Mass Grocery Retail Market by Estimated Number of Outlets
- Table: Sales by Format in The Ukrainian Mass Grocery Retail Market (US$Mn)
- Table: Ukraine Average Annual Sales by Outlet Type (US$Mn)
- Table: Key Players in Ukraine's Food & Drink Sector
- Table: Key Players in Ukraine's Mass Grocery Retail Sector
- Table: Corn, 2005-2010
- Table: Soybean, 2005-2010
- Table: Rice, 2005-2010
- Table: Wheat, 2005-2010
- Table: Cocoa, 2005-2010
- Table: Coffee, 2005-2010
- Table: Milk, 2005-2010
- Table: Sugar, 2005-2010
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Table: Education, 2002-2005
- Table: Vital Statistics, 2005-2030
- Table: Employment Indicators, 2001-2006
- Table: Consumer Expenditure, 2000-2012 (US$)
- Table: Average Annual Wages, 2000-2012