Eastern Europe offers growth momentum, report

By Jess Halliday

- Last updated on GMT

Related tags Leatherhead food international Eastern europe

Political and economic stability in Eastern Europe makes an attractive proposition for food and drink manufacturers, according to Leatherhead, especially as Western European markets are marked by maturity and recession.

Although there have been some tensions in the Eastern European region in recent months – such as the disputes between Russia and Georgia and between Russia and Ukraine, elsewhere the situation ahs been relatively stable.

As all countries are now operating as democracies, they make for more attractive investment propositions for firms with their headquarters elsewhere. Moreover, tight regulations that held markets in their grim in the past have now eased off, which makes it easier for foreign retailers to establish a presence.

According to the new report from Leatherhead Food International, called Emerging European Food Markets​, government agencies have actively encouraging investment in their food industries.

The report contains good news for international firms that have already made the move East, including the likes of Nestle, Unilever and Kellogg; global ingredients firms have also been building presence in the East, so as to supply their multinational clients on the ground and develop new clients in the domestic market.

And as economic gloom settles over the Eurozone is even affecting foods – traditionally seen as ‘recession-proof’ – high growth in emerging European markets could prove an important counter-weight.

East v West

Despite Western European markets seeing modest growth and Europe as a whole retaining a 43 per cent share in the global food and drinks market, the report says that Europe “has held onto its dominant position as a result of the strong growth witnessed recently in many of the region’s central and eastern countries”.

Russia is a particularly good example of growth. Leatherhead values its market as worth around €160bn in 2007 – an increase of around 45 per cent on 2005. Affluence amongst consumers could push it beyond €200bn by 2010.

On a global scale, as international brands and retail chains move into the market, the prediction is that Central and Eastern Europe will increase its share of total food and drink expenditure in the years to come.

Growth categories

The new report from Leatherhead also gives an insight into the kinds of foods that are likely to see market growth in the Eastern European economies.

Dairy foods are identified as products with high potential across the whole region, and soft drinks and convenience foods also score highly.

Non traditional food stuffs are becoming more popular with Eastern European for a number of reasons, including higher disposable incomes, more branded goods from overseas, and increased tourism outside of the region.

The new report is available from Leatherhead Food International​.

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