Beer Coming Back As Wider Consumer Sector Continues Slow Recovery

It has been a tough few years for the Romanian beer industry, as a weak economy and periods of unfavourable weather, most recently back in the early part of 2012, have had a direct impact on beer consumption. Reflecting the post-2008 difficulties the economy has had in returning to growth, Romania has been a frustrating market for some of the major beer companies operating there. Unlike some other markets in emerging Europe, Romania has a fairly large population of about 21mn, and there is still room for incomes to grow strongly. This is the kind of profile that appeals to beer companies, and why we believe the country still holds promising long-term potential. However, things have started to look better since the combined beer volume contractions of about 10% between 2009 and 2010, according to our data. Between 2013 and 2017, we forecast compound annual growth of around 2%.

Higher Spending Power Anticipated
Romania Per Capita GDP (US$) - Historic & Forecast

We still like the Romanian consumer story in the long term though, certainly on a regional level given the size of its population. Due to this market size, Romania sits just below our favourite Central and Eastern European markets - Poland, Russia and Turkey - in our Food & Drink Risk/Reward Ratings. Although the Romanian population is not growing, it is still fairly large in absolute terms.

Although confidence is far from where it was in the pre-recession boom years, there is still room for growth in beer sales. With per capita consumption levels estimated at below 90 litres, which is lower than a number of other countries in the region, it is very likely that there is more that can be done in terms of beer growth, with companies such as SABMiller among those with a strong presence.

This article is tagged to:
Sector: Food & Drink
Geography: Romania

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