Williamstown, MA -- (SBWIRE) -- 04/30/2012 -- The ever-deepening eurozone debt crisis is proving a major challenge to Germany's economic growth model. Further escalation of the crisis, which could see a sovereign or a financial institution default, may tip the balance and result in a major recession in Europe's biggest economy, which almost certainly would drag global growth into recession as well. For the time being we continue to hold to our 'muddlethrough' scenario for the eurozone despite acknowledging enormous risks of a break-up of the European monetary union. Somewhat more encouraging for Germany's longer-term growth outlook is the improvement witnessed in the domestic demand picture. Key to the improved performance of German households has been the continued decline in the unemployment rate, which fell to a post-reunification low of 6.8% in December 2011.
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Headline Industry Data (local currency)
- 2012 per capita food consumption = +2.5%; forecast to 2016 = +15.5%
- 2012 alcoholic drink sales = 0.8%; forecast to 2016 = +3.6%
- 2012 soft drink sales = +2.8% ; forecast to 2016 = +15.6%
- 2012 mass grocery retail sales = +4.5%; forecast to 2016 = +28.4%
Key Company Trends
Competition In German Ice Cream Heating Up: In early 2012 there were signs of increased competitive activity in Germany's ice cream sector. The country's largest dairy, DMK, announced that its ice cream unit would now operate as a standalone unit to be named DMK Eis. The firm said the move would allow it to innovate more quickly, with faster decision making and increased flexibility. DMK earlier had failed to acquire local rival Durigon after talks broke down. Durigon was subsequently acquired in November 2011 by UK-based ice cream maker R&R, which has been expanding aggressively across Western Europe.
German Wine Sector Needs To Consolidate To Compete: In December 2011, two German wine cooperatives, Deutsches Weintor and Niederkirchener Weinmacher, completed a merger to become the largest wine cooperative in the Pfalz region of Germany. The two groups have been cooperating in areas such as bottling and purchasing and will now be fully integrated after the deal was overwhelmingly approved by the groups' members. The move creates a firm with revenues of around EUR35mn and can be seen as a reaction to the highly competitive nature of the German market, where sales are growing but price sensitivity is high. The combined group has highlighted the potential within the German market through increasing distribution while also underlining the export opportunities that exist for the increasingly well-regarded German wine sector.
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