Boston, MA -- (ReleaseWire) -- 03/17/2014 -- Political instability in Bulgaria will continue to stifle private consumption and investment, weighing on headline growth through 2014. Despite government expenditure and a positive contribution from net exports propping up economic activity, real GDP growth will reach just 0.5% and 1.5% in 2013 and 2014 respectively. We expect a slow rebound in household consumption, with growth to reach just 1.0% in 2014; this will have subsequent implications for food and drink spending.
Headline Industry Data (local currency):
- 2013 food consumption growth: +0.9%; forecast compound annual growth rate (CAGR) 2013 to 2017: +1.3%.
- 2013 alcoholic drinks sales growth: +1.4%; forecast CAGR 2013 to 2017: +3.4%.
- 2013 soft drinks sales growth: +4.4%; forecast CAGR 2013 to 2017: +2.7%.
- 2013 mass grocery retail sales growth: +1.7%; forecast CAGR 2013 to 2017: +2.6%.
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Key Industry Trends
Danone Transfers Ownership of Bulgarian Plant
In autumn 2013, Danone transferred ownership of its Bulgarian subsidiary Danone Serdika's production facilities to Schreiber Foods. The transaction includes the transfer of all production facilities and Danone products that are manufactured by Danone Serdika, which is situated in Sofia. Schreiber Foods will continue to manufacture all Danone products that are currently produced in the Sofia factory and will ensure its existing employees are kept on. The sale of the plant is part of Danone's strategy for optimising production capacity, costs and improving its competitiveness, following weak results in Europe over 2013. Danone is also transferring its production capacities in Portugal and the Czech Republic to the American company.
Bulgarian Wine Exports Hot Up
According to the EAVW in Bulgaria, the country's wine production will increase by 45% 2013, to reach 180-200mn litres. For the first half of the year, exports of Bulgarian wine saw a 5.4% increase, to 28mn litres. The EAVW is forecasting that China will become a major export market, with almost 1mn litres of Bulgarian wine to be sold in the country by the end of 2013. Vietnam and North Korea are seen as new markets for the country's wine exports. The USA cited as another potential market, with some industry officials predicting that 40mn bottles of Bulgarian wine could be sold on the US market within five years.
Key Risks to Outlook
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