BMI's Executive Summary

[TOP]

At the end of 2007, Ukraine's government was grappling with rapid food price inflation. So far, it has ignored calls by outgoing Prime Minister Viktor Yanukovich in early November for price controls on basic foodstuffs. In attempt to bring down bread prices, the authorities released grain from its reserves, pledging to deliver 47,000 tonnes to the regions to be sold at around 25% below the market price. Grain exports remained tightly capped until at least January. The National Bank of Ukraine and outside ratings agencies warned inflation could exceed 11% in 2007. A 2.2% monthly jump in prices in September was attributed to high food prices. Meanwhile, the food industry registered 13.3% year-on-year (y-o-y) growth over the first nine months of 2007. Consumer spending is driving the boom, but inflation, exacerbated by rising raw material costs and energy rates threatens stability.

BMI reckons total food and drink consumption will have hit US$16.20bn in 2007, roughly double the 2002 figure in US dollar terms. The new five-year forecast sees this figure growing by 47% up to 2012, reaching US$23.05bn. But this forecast is still cautious given Ukraine's continually murky risk outlook. As of early November, it appeared as if fiery Yulia Timoshenko, previously sacked as prime minister in 2005, would form the next government with her eponymous bloc and President Viktor Yushchenko's Our Ukraine party. The economy has prospered, on autopilot. Foreign investment flows rose by a third in 2007, helping to obscure a widening trade deficit.

Whatever the risks, foreign and domestic investment in Ukraine's food and drink industries reached a peak in 2007. In June 2007, PepsiCo and PepsiAmericas picked up number one juice maker Sandora for a record US$542mn, while in July Orangina acquired soft-drinks maker Rosinka. Large local players are investing too, building capacity and market leadership. Confectionery maker Roshen opened a major new factory in Vinnitsa in Q407 and is reportedly planning to build a second, US$119mn facility on the site. Smaller rival Konti, launched production of a new line of chocolate bars and said it was aiming to push annual sales to US$500mn by 2008. In the juice, soft drinks and beer markets, multinationals have established market leading positions, while Russia's Wimm-Bill-Dann (WBD)and Danone have strong positions in dairy and Coca Cola a strong second place in mineral water.

The lure of the Ukrainian market for foreign players is clear: a large population, fast expanding modern retail sector, buoyant consumer spending and an economy that has defied political chaos and high energy prices – for now at least. Ukraine stands 12th in BMI's new Food and Drink Business Environment Ratings out of the 14 major markets of Central and Eastern Europe, a reflection of continued huge potential balanced against equally large political and economic risks. Beyond a manifestly weak central government, a dilapidated agricultural sector and crumbling infrastructure will pose ever greater problems. Reforms remain stalled in most areas of the economy and World Trade Organisation (WTO) membership remains just out of reach. A major crisis may be some ways off, but equally, so are any chances of a major positive breakthrough to establish a modicum of stability and sustainable growth.

Contents

[TOP]

Chapter 1 – Business Environment

Table: Central And Eastern Europe Business Environment Rankings

SWOT Analysis

Ukraine Food & Drinks Industry SWOT

Ukraine Political SWOT

Ukraine Economic SWOT

Ukraine Business Environment SWOT

Macroeconomic Outlook

Table: Ukraine: Macroeconomic Data And Forecasts

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: Ukraine MGR Value Sales By Format – Historical Data & Forecasts

Company Developments

Market Overview – Ukraine

Table: Structure Of The Ukrainian MGR Market By Number Of Outlets

Table: Sales By Format In The Ukrainian MGR Market (US$bn)

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: Ukraine Food Consumption Indicators – Historical Data & Forecasts

Drinks

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

Food

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

Industry Developments

Company Developments

Market Overview – Ukraine

Table: Ukraine Agricultural Sub-sector Production (Volume, tonnes)

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

Chapter 4 – Tobacco

Industry Developments

Company Developments

Market Overview

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

Chapter 5 – Competitive Landscape

Table: Key Players in Ukraine’s MGR Sector 2005

Table: Key Players In Ukraine’s MGR Sector 2005 (continued)

Table - Key Players: Ukraine’s 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

Overline – Odessa Sparkling Wine Company

Fozzy Group

Galakton

Roshen

Baltic Beverages Holding

Rainford

Billa

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

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

[TOP]

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

[TOP]

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: