As we previously noted, the consumer outlook for Belarus will remain extremely challenging, with inflation expected to skyrocket. As imported goods become more and more expensive, consumers will most likely focus their attention on economically priced and durable foodstuffs as discretionary spending dwindles for most of the population. We do not expect domestic demand to recover over the course of 2012, especially as the government sees no need to pursue loan negotiations with the International Monetary Fund.
Headline Industry Data (local currency)
- 2012 food consumption = +54.76%; forecast compound annual growth rate (CAGR) to 2016 = +21.99%
- 2012 per capita food consumption = +55.28%; forecast CAGR to 2016 = +22.37%
- 2012 alcoholic drinks value sales = +67.83%; forecast CAGR to 2016 = +23.01%
- 2012 soft drinks value sales = +67.54%; forecast CAGR to 2016 = +25.92%
Key Company Trends
Government Encouraging The Opening Of Neighbourhood Stores: According to February 2012 reports by BelTA, the country's trade ministry is to promote the opening of convenience stores throughout the year. The authorities also reviewed the performance of the mass grocery retail sector in order to establish infrastructural priorities for 2012. Neighbourhood stores are popular across the Commonwealth of Independent States region and are seen as being healthy competition to chain stores.
Domestic Beer Production Increasing: According to BelTA reports, quoting Belgospishcheprom, local breweries managed to produce 3,331mn decalitres of beer in January 2012, with the figure higher by 44.3% year-on-year (y-o-y). Exports of beer in the same month rose by 11.2% y-o-y, to 306,900 decalitres. For the whole of 2011, output stood at 46.96 million decalitres, an 18.2% y-o-y rise.
Key Risks To Outlook
Inflation Out of Control: Beset by hyperinflation, Belarus remains in need of tighter domestic policy to help avert second-round inflationary pressures and a further sell-off in the currency. However, while the stepping up of financing support from Moscow has helped alleviate near-term balance of payments pressure, the potential for policy slippage on the part of the Belarusian government has concurrently risen. Even if the authorities manage to stabilise the currency and medium-term inflationary levels, the economic outlook facing Belarus remains severe. We expect household demand and economic confidence to remain under pressure owing to higher import costs and punitive interest rates.