International manufacturers will be hit by Greek measures, analyst

By Jess Halliday

- Last updated on GMT

Related tags: Food, Greece

Greek consumers are likely to curb their spending on relatively new additions to their diets due to the austerity measures, predicts Euromonitor's expert on Greece, meaning that multinational firms will be more affected than Greek companies making traditional-style foods.

According to Sarra Kassem, senior research analyst at Euromonitor International for Greece and Turkey, the early days of the economic downturn did not have a big effect on food sales in Greece. In late 2008, even consumers who did not have much money were still buying packaged and prepared foods – often picking products that could be shared between a group at home rather than going out to a restaurant for dinner.

“Prices did go up, in some cases more than in the rest of Europe,”​ she said. “But it’s part of the Greek mentality. Food is important and people wouldn’t trade down to save money.”

But the new government measures to rescue the economy, and the EU/IMF bail out package, mean Kassem does not expect the same fortunes foe food in Greece this year.

“Salaries have become much lower,”​ she said. People in the public sector have seen their salaries slashed by as much as 25 per cent. “It will be a completely different story, where you buy just the things you need, and switch to private label.”

According to Kassem, Greek consumers have tended to look down on private labels foods in the past – although they have been keener on own-brand cleaning products. Now the supermarkets are preparing for a change of heart and expanding their private label ranges.

She also said that the multinationals’ brands are more likely to be affected by spending cuts than local brands, as “people prefer local products”.

“Imported cheeses are doing ok, but they are nothing compared to Greek cheeses,”​ Kassem said. In the bakery sector, 70 per cent of sales are artisanal, unpacked products – and even more people are likely to shift from packaged to unpackaged products, she predicts.

The biggest manufacture in the marketplace is Greek company Vivartia, which is present in most categories as it was formed in 2006 out of a merger between several Greek companies spanning the food industry.

In many categories – and in particular bakery and dairy goods, the leading companies are Greek. An exception is Unilever, which leads in oils and fats but only because it acquired Greek oil producer Elais in 2005.

What will stay and what will go?

Kassem predicts that breakfast foods will be one of the product categories worst hit by reduced food budgets, and other products that are “not part of everyday life”.

Breakfast foods for the home are a relatively new addition to the Greek household, and many people do not have breakfast, but make do with a coffee and eat a pasty later in the morning.

Ready meals’ fortunes are not looking good, either, as Greeks realise it may be cheaper to prepare a meal from scratch at home rather than pay dearly for convenience.

Jams and honey, too, are not expected to do well; and consumers could well switch to cheaper brands of olive oil.

Cheese is also likely to retain its important role in the Greek diet – and more recent light versions will remain popular because they are seen as being a way to enjoy a traditional food more healthily.

Confectionery, too, is seen as an indulgence but not an expensive one. “I am not sure people will give it up,”​ Kassem said, adding that chocolate confectionery tends to be seasonal anyway. Kiosks do not tend to stock it after May because of high temperatures; however confectionery manufacturers have tended to push ice-cream extensions in the summer months to retain the brand awareness.

Related topics: Market Trends

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