Boston, MA -- (SBWIRE) -- 08/31/2012 -- BMI View: Following weeks of speculation and apocalyptic warnings of a potential exit from the eurozone, Greek elections have yielded a much more benign outcome than many feared. The incoming government will continue to follow the austerity path prescribed by the Troika. We have previously asserted that a fundamental shift in German policy with respect to the eurozone crisis would eventually materialize as blunt austerity fails to alleviate the bloc's debt burden. However, we think an alleviation of German austerity demands and plans for boosting employment and growth could still be a year or more away. In the meantime, the incoming Greek government will have to continue toeing the Troika line, albeit with some potentially minor concessions such as a slightly more palatable pace of deficit reduction, and the continued pain of austerity will hit consumer demand.
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Headline Industry Data (local currency)
- 2012 per capita food consumption = -5.5%; forecast to 2016 = -3.9%.
- 2012 alcoholic drink value sales = -7.1%; forecast to 2016 = -6.9%.
- 2012 soft drink value sales = -8.8%; forecast to 2016 = -11.8%.
- 2012 mass grocery retail sales = -1.5%; forecast to 2016 = +5.7%.
Key Company Trends
Carrefour Exiting Greece: In June 2012, Shortly after the arrival of new CEO George Plassat, French retail giant Carrefour announced the sale of its stake in its Greek unit to joint venture partner Marinopoulous that will see the firm now operate in the country solely on a franchise basis. With this move the firm has demonstrated a willingness to cut its losses in contracting mature markets.
Coca-Cola Hellenic To Restructure Operations In Greece: In March 2012 it was revealed that Greecebased bottling firm Coca-Cola Hellenic is set to cease production at two of its five plants in the country, Thessaloniki and Patras. The company reported a fall of 12% in its sales volume in 2011 due to higher sales tax and reduced customer spending. This restructuring of operations is a strategic move to cope with the continuous decrease in sales in the Greek market especially over the last few years.
Key Risks To Outlook
Political Pressures Mounting: The prospect of further spending cuts and tax hikes will ensure that demonstrations and national strikes remain a key feature of the political landscape over the medium term. The severity of the fiscal consolidation programme and the public backlash means that the scope for slippage will remain pronounced over the medium term.
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