BMI's Executive Summary

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The Romanian beer market has been attracting strong interest from international investors in recent months thanks to booming growth, which has led a number of the industry's key players to invest in increasing their production capacity. In September Anglo-South African brewer SABMiller announced its plans to invest EUR50mn (US$69mn) in expanding production at its Timisoara brewery in Romania. The company's Ursus Breweries subsidiary will use the funds for modernising its facility, and to increase capacity by around 200%; the weekly production capacity at the Timisoara brewery is currently around 21,000 hectolitres. Ursus will build a new store warehouse and also invest in a new brew house, and fermentation, filtration and storage tanks. Also in September, Belgian brewer InBev announced that its Romanian sales were up by 27% in H107. InBev is one of the top players in the Romanian beer market, with an estimated share of 23%. This impressive jump in sales was the biggest registered in the CEE, followed by Ukraine and Russia.

Meanwhile, rival beer company Heineken announced that its Romanian unit reported a strong rise in sales for the first half of 2007, on the back of the expansion of its product portfolio. Gross turnover in the six-month period grew by 36% year-on-year to reach EUR120.2mn (US$167.8mn), and volume sales were also up by 20% to 2.3mn hl. Sales of the company's flagship mainstream brands rose by 40% in volume terms, while market share rose a marginal 0.6% to 26.5%. Heineken also announced planned investments to expand its annual production, with EUR40mn (US$58.7mn) earmarked to raise production capacity from 5.2mn hl to 6mn hl. Finally, in early November United Romanian Breweries Bereprod, bottler of Carlsberg in Romania, announced that it will invest between EUR60-90mn to double its production capacity to 4mn hl annually, which would represent just under one quarter if the total capacity of the Romanian beer market. The decision follows strong growth in the first nine months of 2007, boosted in part by high temperatures.

Turning to the agricultural sector, the picture is not as bright, as recent poor performance in this sector has been dragging on GDP growth. Not only is agriculture an important contributor to economic growth, but its effects are felt on consumer spending, since much of the population is directly involved in food production or exposed to the sector in some way. Some 10% of the Romanian economy is agrarian, with around one in five Romanians owning a small farm and as many as one in three involved in subsistence farming. Although high global wheat prices are currently helpful to the country's farmers - as wheat and maize form a high proportion of arable output - heavy droughts have decimated crops so far this year, and the country looks set to become a net wheat importer in 2008. Therefore, while some categories within the food and drink industry are booming, others will continue to struggle in coming years.

Contents

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Chapter 1 – Business Environment

Table: Central & Eastern Europe Business Environment Rankings

SWOT Analysis

Romania Food & Drink Industry SWOT

Romania Political SWOT

Romania Economic SWOT

Romania Business Environment SWOT

Macroeconomic Outlook

Table: Romania – Economic Activity

Chapter 2 – Retail

Plenty Of Potential For Private Labels In CEE

Table: PL Market Share Within Overall Food And Drink Retail Sales, 2006, Selected CEE Countries

Table: Leading CEE Retailers By PL Market Share

Industry Forecast Scenario

Table: Romania MGR Value Sales By Format – Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview – Romania

Table: Structure Of Romania’s MGR Sector By Number Of Outlets

Table: Structure Of Romania’s MGR Sector – Sales Value By Format (US$mn)

Table: Structure Of Romania’s MGR Sector – Average Sales Value Per Retail Outlet (US$mn)

Chapter 3 – Food & Drink

CEE Food Focus: Fittest Fight For Future Of CEE Dairy Market

Table: EU Allocation Of Milk Quotas To 2004 Accession Countries In The CEE (1,000 Tonnes)

Industry Forecast Scenario

Table: Romania Food Consumption Indicators – Historical Data & Forecasts

Food

Table: Value/Volume Sales Of Canned Food & Confectionery – Historical Data & Forecasts

Drinks

Table: Romania Beverage Sectors Value/Volume Sales – Historical Data & Forecasts

Trade Figures

Table: Sectoral Trade Indicators Export, Import And Balance Value – Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview – Romania

Table: Romania Agricultural Sub-Sector Production – Historical Data, Volume (tonnes)

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: Cigarette Value/Volume Sales – Historical Data & Forecasts

Industry Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players In Romania’s MGR Sector

Table: Key Players In Romania’s Food & Drinks Sector

Regional Company Case Studies

Mercator – CEE Case Study

Financial Highlights

Table: Mercator’s Financial Highlights

The Only Way Is Up…

Current Position

Table: Mercator’s Market Share Growth To 2005

Covering All The Bases

The Importance Of Private Label

Future Position And Growth Strategies

Table: Projected Growth In Market Share, According To Company Strategy, 2005-2010

Group Diageo – CEE Case Study

Table: Brand Performance – Europe, Year Ending June 30 2006

Table: Diageo: Distribution In The CEE

Groupe Danone – CEE Case Study

Groupe Danone – The CEE Figures

Table: Key Figures By Business Line

Table: Key Figures Over Five Years, Fresh Dairy Products (EURmn)

Metro – CEE Case Study

Table: Metro’s Presence In CEE

Table: Development Of Group Sales And Divisional Sales As Well As Regional Sales

Company Profiles

Hyparlo

Alka Romania

Metro Cash & Carry Romania

Mega Image

Quadrant Amroq Beverages SA (QAB)

Galaxy Tobacco (Societatea Nationala Tutunul Romanesc)

Vel Pitar

Brau Union Romania

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

Competitive Landscape for Europe Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of European Food Sources

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BMI's European Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: