Dallas, Taxas -- (SBWIRE) -- 10/06/2010 -- While the Serbian economy has emerged from recession, we expect 2010 to remain challenging to the consumer, not least because of the weak dinar and high unemployment rates. Consequently, we continue to regard Serbia as one of the least attractive food and drink markets in emerging Europe in the current year, although we conceded that its potential is more likely to be realised over the longer term. Political uncertainty will also serve to discourage foreign direct investment (FDI) – albeit only to a certain degree – as European companies in particular remain committed to expansion in less developed markets, despite the risks.

Headline Industry Data
• 2010 per capita food consumption: +1.28%; forecast to 2014: +15.08%
• 2010 alcoholic drinks sales: +3.25%; forecast to 2014: +16.15%
• 2010 soft drinks sales: +4.13; forecast to 2014: +21.03%
• 2010 mass grocery retail sales: +1.77%; forecast to 2014: +27.68%

Key Company Trends
Consolidation Across the Board – While the past few months have not witnessed any formal agreements in this direction, Croatian food conglomerate Agrokor and Belgian mass grocery retail (MGR) operator Delhaize appear to be eying the respective Serbian markets. Privatisation initiatives undertaken by the Serbian authorities, in addition to the challenging economic environment and high unemployment rates, will continue to provide key drivers towards industry consolidation across both food and beverages, and MGR industries. While the benefits of involvement in the Serbian market may not be immediate, the need for expansion in order to continue growing profits and staving off competition will continue to stimulate foreign interest in the country.
Key Risks to Outlook
Drag of the Regional Economies – While the worst seems to be over, risks to Serbia's recovery remain very much in place. For one thing, the regional economy remains weak, with many of Serbia's peers and trading partners struggling to emerge from recession.
Furthermore, the Serbian dinar has depreciated markedly since late-2008, which has negatively affected households that took out foreign currency loans as well as the affordability of imported foods and beverages

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