Boston, MA -- (SBWIRE) -- 07/27/2012 -- The Dutch economy's exposure to the eurozone sovereign debt crisis continues to weigh heavily on economic activity and confidence. The Dutch economy has entered a technical recession, and our expectation for weaker private consumption and continued fiscal consolidation by the government, combined with much weaker external demand for the country's exports, is set to drag further on growth. Netherlands-based retailer Ahold posted weak first-quarter results in its domestic market, with a slowdown in the Dutch economy putting pressure on consumer spending. Ahold's Dutch sales increased by 1.2%, but by just 0.2% in like-for-like terms. This was despite domestic operating margins during the quarter falling to 6.0%, from 6.9% in Q411, which is indicative of the pressure put on pricing and an increase in promotional activity.
Headline Industry Data (local currency)
- 2012 per capita food consumption = +0.9%; forecast to 2016 = +17.0%
- 2012 alcoholic drink sales = +0.7%; forecast to 2016 = +7.4%
- 2012 soft drink sales =+1.2%; forecast to 2016 = +14.9%
- 2012 mass grocery retail sales = +3.3%; forecast to 2016 = +32.7%
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Key Industry Trends & Developments
Douwe Egberts To List On Dutch Exchange: US food company Sara Lee is to be split into two units and has announced that it would list coffee unit Douwe Egberts on the Dutch Stock Exchange on June 28. Douwe Egberts will commence trading on July 9. The listing could make Douwe Egberts more vulnerable to the prospect of a takeover, in our view. It is currently the third largest coffee company in the world behind Nestle and Kraft, with annual sales of US$3.3bn.
Dutch Retailers Face Sales Tax, Excise Duties Increases: In May 2012, Bloomberg reported that Dutch food and drink retailers will face an increase in sales taxes and higher excise duties in order to meet EU budget rules. As part of an agreement on austerity, the Dutch government as of October will boost the highest VAT rate on consumer goods to 21% from 19%, although a lower food and beverage sales tax rate will be maintained. The government will also increase excise duties on tobacco, alcohol and soft drinks in order to raise EUR625mn (US$811mn). Dutch consumer confidence hit the lowest level since 2003 in March 2012, according to the Central Bureau of Statistics
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