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Market Research Report

Packaged Food in Ukraine

Published by	Euromonitor International
Published	December, 2009	Product code	117086
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Price	US $ 6500 PDF by E-mail (Single User License)

Introduction
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Packaged Food in Ukraine published by Euromonitor International in December, 2009. This report price starts from US $ 6500.

Introduction

Abstract

Euromonitor International' s Packaged Food in Ukraine market report offers a comprehensive guide to the size and shape of the market at a national level. It provides the latest retail sales data, allowing you to identify the sectors driving growth. It identifies the leading companies, the leading brands and offers strategic analysis of key factors influencing the market - be they new product developments, packaging innovations, economic/lifestyle influences, distribution or pricing issues. Forecasts illustrate how the market is set to change.

Why buy this report

Get insight into trends in market performance
Pinpoint growth sectors and identify factors driving change
Identify market and brand leaders and understand the competitive environment

Product coverage

Baby food; Bakery products; Canned/preserved food; Chilled processed food; Confectionery; Dairy products; Dried processed food; Frozen processed food; Ice cream; Impulse and indulgence products; Meal replacement products; Meal solutions; Noodles; Nutrition/staples; Oils and fats; Pasta; Ready meals; Sauces; dressings and condiments; Snack bars; Soup; Spreads; Sweet and savoury snacks

Executive summary

Demand for packaged foods affected by downturn

In 2009 the Ukranian packaged foods market was deeply affected by the recession. Real disposable income dropped, the unemployment rate increased, consumers switched from high- and middle-priced goods to low-middle price segments. Consumption of imported products suffered from the devaluation of the Ukranian hryvnia. Sales of nonessential products declined as consumers purchased only the basics. Manufacturers were trying to stave off dropping demand by using cheaper packaging and Ukranian ingredients instead of imported, by decreasing package sizes, and by shrinking assortment ranges; these became the key tendencies of 2009. Moreover, sales on weight, and purchasing of artisanal products became more popular amongst Ukranians. Further, people preferred eating at home and cooking by themselves products and/or meal solutions that previously they bought in the stores.

Liquidity deficits prevent M&A activity

Drop of demand and the devaluation of local currency have led to diminishing profits for manufacturers. In addition, lack of credit resources to replenish the working capital and worsening payment discipline of retailers and distributors has pushed producers to down-scale or even cease operations. Companies with access to foreign markets have found themselves in the best positions as devaluation of the local currency had a positive impact on their costs. Companies with low debt levels, and with access to raw materials or their own raw materials production (for example, an agricultural subsidiary), did not have a high share of imported ingredients in products and were therefore able to control costs. However, under high debt pressure and facing decreased demand many company owners have decided to sell their businesses. Nevertheless, lack of liquidity and high country risks prevented M&A activity over the second half of 2008 and in 2009.

Financial hardship intensifies competition

The competitive environment became harder, especially for small local companies without well-known brands, as retailers and distributors are not interested in goods with low turnover due to lack of working capital. Drop of consumer demand for premium goods negatively affected producers' profit margins. To survive, the companies rebalanced product portfolios and decreased mark-ups. Due to devaluation of the hryvnia, local brands became more price competitive compared to imported brands. Some local producers in the dairy segment sold low-margin products on the domestic market whilst most profit came from exports.

Supermarkets/hypermarkets gaining importance in distribution

The key distribution channels for packaged foods in Ukraine were supermarkets/hypermarkets, independent small grocers and other grocery outlets, which include street stalls/kiosks and outdoor markets/bazaars. The latter channel' s importance is gradually diminishing, in cities in particular, as consumers are looking for higher-quality products and are more concerned about the shelf life of products and their expiration dates. However, the channel remains important in rural areas, which supermarkets and hypermarkets have not yet penetrated. Rising share of private label in the assortment of local retailers, consumers' desire to save money, and entrance on the market of leading foreign discounters will stimulate development of discounters in retailing.

Packaged food consumption likely to resume growth in the forecast period

Drop in consumer income and high food inflation over 2008 led to redistribution of consumer spending in packaged foods - mainly towards focusing more on products needed for the basic diet of Ukranians rather than on nonessentials. However, as recovery of economy starts, previous trends such as premiumisation, health and wellness innovation and rising consumption of the snack group of goods will take place. At the same time, share of private label will steadily rise.