Netherlands-based fresh meat producer Vion and Dutch food group Wessanen feeling the pinch

July 30, 2009 - PRLog -- The outlook for the Dutch economy appears to be gloomy, GDP is expected to contract by 3.4% in 2009 followed by a further contraction of 0.4% in 2010 and this is having a knock-on effect on the country's food and drink industry. This quarter has seen a number of the country's food and drink producers as well as its retailers announce falling sales and profits.

Among those companies feeling the pinch are Netherlands-based fresh meat producer Vion and Dutch food group Wessanen. Vion announced this quarter that for FY08 its net profit had fallen 57% year-onyear (y-o-y) to EUR54mn (US$73.7mn), while Wessanen registered a net loss of EUR3.3mn for Q109.

Both companies cite high input costs as one of the reasons for the disappointing profit levels particularly since these cannot be passed on to the consumer in such a price sensitive market. In the drinks industry Dutch brewing giant Heineken is also feeling the effects of a dip in consumer spending reporting that during Q109 like-for-like sales decreased 1%, while like-for-like beer sales by volume fell 6%. However, this drop in volume sales cannot solely be attributed to the turbulent economic conditions, the Dutch beer industry has reached maturity and as such volume sales are expected to drop 4% between 2008 and 2013.

Despite concerns over the economy and weakening consumer confidence, a number of companies are considering investments. Among such companies are UK-based Cadbury, which has reportedly made a bid for Netherlands-based confectionery manufacturer Leaf International, and Netherlands-based soft drink producer Refresco, which has announced plans to expand its operations in Spain and the Netherlands.

Moving to the mass grocery retail sector, this quarter has seen some of the country's retailers struggle.

Both Ahold and Schuitema reported a decline in profit for Q109, the former announced a 24% drop in net profit while the latter posted a 37% decrease in operating profit and an 8.4% reduction in sales when compared to the same period last year.

While activity this quarter has been largely negative with reports of declining sales and profits, the actions of Cadbury and Refresco suggest that the Netherlands still presents opportunities despite both its maturity and the current economic conditions, as shown by the country's favourable position in BMI's Western European Food & Drink Business Environment Ratings where it comes second out of eight regional markets.

http://www.companiesandmarkets.com/r.ashx?id=3CMHDJO2G154027

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