BMI's Executive Summary

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Despite being a relatively low-growth market, Slovakia's food and drink industry continues to attract investments. In October, Senoble, France's leading producer of private label dairy products for retailers, announced its acquisition of its Slovakian counterpart, Gemerska Mliekaren. Located in the south of the country, Gemerska Mliekaren has a staff of 85, collects around 65mn litres of milk annually, and was expecting 2007 turnover to reach EUR23mn (US$33.2mn). Senoble is already present in Slovakia as the country's leading yoghurt producer. Following this acquisition, it will also be the leading milk and butter producer. The value of the transaction was not disclosed, and must pass regulatory approval before the deal is complete. Earlier, Coca-Cola Beverages Slovakia had announced that it has increased the production of its Bonaqua spring water, spending around SKK500mn (US$20.3mn) on a new production line. The new line is based at the company's plant in Luka, in the Trnava region, and will have a production capacity of 300,000 bottles per hour. Coca-Cola Beverages Slovakia was established in 1993 under Coca-Cola Amatil Slovakia and became a member of the Coca-Cola Hellenic Bottling Company in 2007. Clearly the company has recognised the potential of Slovakia's soft drinks market which has grown considerably in recent years, with changing consumption patterns increasing the scope for premium and functional drinks in coming years.

The Slovak food and drink market has developed and matured rapidly following the liberalisation of the economy that occurred after political reforms in 1998. EU accession has seen a wholesale restructuring and consolidation of the food industry from the agricultural to the food-processing sector and this process is still underway. As a small market in close proximity to large food exporting countries such as the Czech Republic, Poland and Germany, Slovakia struggles to maintain its domestic food industry against the tide of often-cheaper imports from other recent EU entrants. Another weakness is that in Slovakia, per-capita food consumption is lower than in other Central European markets, restricting growth in the overall food and drink industry.

However, despite these drawbacks and a comparatively low growth forecast, there are nevertheless some growth opportunities available as consumers see a steady rise in their disposable incomes. In fact the Slovak economy remains the fastest growing in central Europe, with real GDP growth coming in at an impressive 9.0% y-o-y in the first quarter of 2007. Apart from the manufacturing industry, also underlining the strong Slovak economic performance is steady and robust private consumption growth, which expanded in real terms by 6.5% y-o-y in Q107, down just slightly from the 6.6% y-o-y growth figure recorded over the same period a year earlier. The economic picture certainly looks healthy and our view is that there are few risks to the growth outlook over the short term. What this means for the food and drink industry is that despite being a relatively low growth market, there are still opportunities available if you know where to look.

Contents

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Chapter 1 – Business Environment

Business Environment Rankings

Table: Central And Eastern Europe Business Environment Rankings

Slovakia’s Ratings

SWOT Analysis

Slovakia Food & Drink Industry SWOT

Slovakia Political SWOT

Slovakia Economics SWOT

Slovakia Business Environment SWOT

Macroeconomic Outlook

Table: Growth & Output

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: Slovakia Mass Grocery Retail - Value Sales by Format - Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview – Slovakia

Table: Structure of Slovakia’s MGR Market By Number Of Outlets

Table B: Structure of Slovakia’s MGR Market – Sales Value by Format (US$mn)

Table: Average Value Per 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: Value/Volume Sales of Confectionery – Historical Data & Forecasts

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

Industry Developments

Company Developments

Market Overview – Slovakia

Table: Slovakia Agricultural Sub-Sector Production – Historical Data

Chapter 4 – Tobacco

Industry Forecast Scenario

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

Industry Developments

Company Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players In Slovakia MGR Sector 2005

Table: Key Players: Slovakia Food & Drink 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 Analysis

Coop Jednota Slovensko sd

Tesco Stores SR

Schwarz Group

Tauris as

Heineken Slovensko as

Solivary

Diageo

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: