Boston, MA -- (ReleaseWire) -- 09/04/2012 -- The Hungarian consumer faces a tumultuous 2012, with food and beverage expenditure expected to be constrained by continued fiscal austerity, rising unemployment, depressed economic confidence, poor credit dynamics and a still-large overhang of debt. The unemployment rate ticked back up to 11.6% in February 2012, close to the mid-2010 post-financial crisis high of 11.8% and up sharply from 11.1% in January 2012, while retail sales growth remained flat at 0.6% y-o-y in January. While consumer confidence has been deteriorating over the course of the past year, the government has already outlined further fiscal tightening measures to help plug the budget gap this year, which make for a difficult playing field for companies operating in the Hungarian food and drinks market.
Headline Industry Data (local currency)
- 2012 per capita food consumption: +1.82%; forecast compound annual growth rate to 2016: +4.10%
- 2012 alcoholic drinks sales: +3.42%; forecast compound annual growth rate to 2016: +3.85%
- 2012 soft drinks sales: +1.25%; forecast compound annual growth rate to 2016: +4.34%
- 2012 mass grocery retail sales: +2.58%; forecast compound annual growth rate to 2016: +5.50%
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Key Company Trends
Self-Sufficiency to Reduce Vulnerability to External Shocks: In April 2012, Hungarian pasta maker Gyermelyi reported that it will establish a new mill to boost its daily capacity of wheat and durum wheat. The firm will spend HUF2bn (US$8.89mn) on the new mill, in an effort by the firm to become selfsufficient as a result of durum wheat, which it presently imports from other flour mills. Additionally, Gyermelyi is building an egg farm, an egg-sorting division as well as a packaging materials warehouse.
Retailers Faced with New Store Moratorium: From the start of 2012, the government imposed a ban on the opening of new hypermarkets and shopping malls. The moratorium specifically prohibits the construction of new outlets that are larger than 300m2, which will particularly impact larger retailers that have already had to contend with the 'crisis' tax of 2% on sales over HUF100bn.
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