Research and Markets: Greece Food and Drink Report Q1 2009: Exports & Imports Expected to Reach US$7.89bn and US$8.57bn by 2013

Greece remains one of the marginal food and drink markets within the Western Europe region, as its GDP per capita continues to lag behind those of larger EU members. Additionally, while its climate provides an excellent base for agricultural production, other factors, such as forest fires and the lack of arable land on many of its islands, mean that the country has been a net importer of food over the past decade. However, Greek producers are increasingly investing in local food processing, with forecasting predicting that, by 2013, exports will come much closer to imports in terms of value, at US$7.89bn and US$8.57bn, respectively, up from US$4.91bn and US$7.14bn in 2007.

However, global economic problems continue to pose a threat to the performance of Greek companies, both at home and abroad. Illustrating the situation, in October 2008, Greece-based soft drinks producer Coca-Cola Hellenic Bottling Company (CCHBC) – the second-largest Coca-Cola bottler in the world – slashed its earnings forecast for the second time that year. The company blamed the announcement on weak economic conditions in its key markets and poor weather, with rising prices of packaging materials also being a contributing factor. For the full year 2008, the bottler now expects flat operating profits and a modest 4% year-on-year (y-o-y) increase in volumes, as consumers turn away from non-essential products. CCHBC has also revealed that a drop in consumer confidence is negatively impacting on the firm’s product mix, with consumers reducing their spending on higher margin products and through more profitable sales channels.

Nevertheless, the company risked another acquisition, in August 2008 buying Italy’s second largest Coca-Cola bottler, Socib, in a deal worth EUR270m (US$418mn). The transaction will increase CCHBC volumes in Italy by around 25%, expanding its franchise through the whole of Italy, with Socib operating in the south. While the increased scale should translate into cost efficiencies, the timing of the acquisition is questionable, given that Italy’s soft drink sector growth has been lacklustre.

In the meantime, the country’s mass grocery retail (MGR) sector is continuing to exhibit dynamism. In October 2008, Greek retailers Sklavenitis and Pente revealed a plan to form a joint venture company, Galaxias, in the form of a buying group. The partnership will aim to capitalise on the Greece’s growing MGR market, but also to alleviate economic pressures and achieve better purchasing rices. Around the same time, supermarket chain Masoutis revealed an expansion programme, with plans to construct a new distribution centre.

Finally, Belgium-based grocery retailer Delhaize announced plans to open a discount store chain in Greece, with the two pilot outlets likely to perform well in the face of growing economic uncertainty. Delhaize will rival Germany-based discount operator and Europe’s biggest discount grocery chain Aldi, which is preparing to open its first stores in the country.

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