According to Business Monitor International, which as published its new Croatia Food and Drink Report Q4 2010, consumer confidence has taken a knock, and with unemployment levels high, the short term outlook for the sector is
“While some recovery of annual growth levels are expected in the medium-to-longer term, they will fall short of those recorded pre-recession, with the Croatian consumer increasingly becoming fond of private label items,” says the report.
Private label is said to account for about 19.4 per cent of the food market at present.
The view is in keeping with another market report published earlier this year by Euromonitor International, Retailing in Croatia, which notes that the credit crunch reached Croatia in January 2009.
As in other countries, consumers cut out the luxuries consumers and, as well as plumping for private label foods, they also started visiting discount stores more frequently. However Euromonitor reckons there is only one true ‘discounter’ in Croatia, Lidl.
“Although a lot of supermarkets are labelled as ‘Diskont’, they are not technically so. After the first few years of growing pains, Lidl began to grow rapidly in 2008 and 2009. The Croatian public took time to become acquainted with the type of service that discounters provide, but the credit crunch sped up this process.”
Aside from Lidl, other major players in the Croatian retail space are Agrokor, Billa, Kaufland and Obi Trgovina.
Dominant manufacturing sector
According to the Croatian Chamber of Economy, the food and beverages make up 21 per cent of the overall Croatian manufacturing sector. The food, beverages and tobacco industries employ some 47,000 people in over 1,200 companies.
Major manufacturers that have attracted the bulk of direct foreign investment to date are Vindija, Podravka, Dukat, Pik Vrbovec-Mesna Industrija, Ledo, Jamnica, Coca Cola Beverages, Zvijezda and Mesna Industrija Braca Pivac.
In terms of mergers and acquisitions, the biggest news this year has been the agreement for Croatia’s Atlantic Grupa, which specialises in functional foods, to acquire Slovenian food company Droga Kolinska for around €382m.
“Although tactical product synergies with Atlantic's core functional food and drink products are probably lacking, acquiring Droga would open up routes to the hot drinks and snack food industries in particular,” said BMI.