Sector Study: Delicatessen
Mild rise of the market in 2017
The domestic sector of cold meat manufacturing is examined in a recent study of Infobank Hellastat S.A. According to Alexis Nikolaidis, Economic Research & Sectorial Studies Senior Analyst, in 2017, the market moved slightly upwards, since – according to a survey of IRI on supermarkets – during the first three quarters of the year, an increase of 2.1% was noticed in the value of sales, and 6.9% in the corresponding volume, with the consumers’ shift to new premium codes and the gradual return of the network of Marinopoulos to operation, after its acquisition by Sklavenitis, being positive parameters. However, private-label products have continued to record losses, with the category falling by 3.3% in terms of value, and 2.2% in terms of volume, since the extensive programs of offers on branded products have attracted several consumers.
However, the pressure that has been noticed on the value of sales over the previous years, has also been due to: a) the programs of heavy offers that are applied by manufacturers, in order to restrain the further drop in demand; a policy that is dictated by the extremely competitive environment in the sector, with negative, however, implications on profit margins, b) the consumers’ shift to products on offer. Thus, in 2017, the average selling price of cold meat in the domestic market continued to be under pressure.
A key aspect of competition – in addition to the “price war” – has continued to be the development of premium innovative codes, driven by the twofold concept of “quality-price”, in order to meet more directly the changing consumer needs and shift to healthier nutrition patterns. Currently, the following products are available on supermarket shelves: gluten-free, low-sugar, fresh meat, traditionally produced cold meat, etc.
Regarding the development of an outward-looking attitude, major cold meat manufacturers have attempted to: a) increase their exports, and b) grant their patented inventions to foreign manufacturers (through royalties). Foreign activity has allowed Greek companies to liberate themselves from the “shallow waters” of the Greek market, offsetting thus any domestic losses and fueling their growth.
According to Mr. Nicolas Gouzelos, Chairman & CEO of Infobank Hellastat, “Over the last years, an increase has been recorded in the demand for healthier cold meat with a higher nutritional value (various premium codes, etc.). Therefore, the primary concern of domestic cold meat manufacturers should continue to be to refresh and differentiate their product base with innovative products. Actually, according to a survey by Technavio, the global market is expected to show an average annual growth rate of 11% by 2021, which will be largely fueled by gluten-free products.”
Financial analysisIn the study of ΙΒ.HS, the financial statements of 72 advertising companies are analyzed. The key conclusions can be summarized as follows: In 2016, Turnover recorded an increase of 14.4%, at €311.15m.
- In 2016, Turnover was formed at €335m, having decreased slightly, by 1.3%, compared to 2015.
- Total EBITDA increased by 22%, at €21.33m. Furthermore, the sample continued to be loss generating on a level of pre-tax results, with losses being limited to €9.26m, from €13.16m in 2015.
- The EBITDA margin increased marginally to 7.2%. On the contrary, the EBT margin deteriorated to -1.4%.
- Capital leverage improved slightly to 3.1 over 1, remaining high.