Year 11 | 20 July 2019 | email@example.com
Germany's economic recovery is in full swing with base effects, the improving domestic consumer climate and strong foreign demand all having a positive impact on growth. Germany's economy posted its strongest growth rate since reunification in 2010, coming in at 3.6%, slightly above our initial estimate of 3.4%. In addition to foreign trade, domestic demand made a substantial contribution to the headline growth figure in 2010. In the near term we remain optimistic, with growth in 2011 expected to come on the back of strong demand for Germany's exports in France and Asia.
Headline Industry Data
- 2011 per capita food consumption = +2.7%; forecast to 2015 = +11.6%
- 2011 alcoholic drink sales = -0.6%; forecast to 2015 = +2.5%
- 2011 soft drink sales = +2.1% ; forecast to 2015 = +8.3%
- 2011 mass grocery retail sales = +4.8%; forecast to 2015 = +17.8%
Key Company Trends
Possible CCE expansion into Germany - With Coca Cola Enterprises generating 72% of its revenues in North America, the recent disposal of this unit has left the company as a significantly smaller entity but with a very strong balance sheet and in a good position to expand. The deal included an option to buy The Coca-Cola Company (Coke)'s 83% stake in its German bottling operations (Coca-Cola Erfrischungsgetranke) 'at fair value' and the large German market will be enticing, although it certainly presents a number of unique challenges for soft drink operators.
Rewe FY results reflect economic growth - German retailer Rewe has recently posted strong domestic results that chime with the underlying economic growth in the country. For 2010 the firm registered a 3.5% increase in total sales, although sales in Germany outpaced the wider group, with growth of 4%. This growth was driven by the company's supermarket outlets, with growth up by 6.4%, but was weighed down by the underperformance of the company's Penny discount stores, which registered a 1.2% contraction in revenues. The outperformance of the supermarket sector is in line with a strengthening of the domestic consumer market and is reminiscent of the two years leading up to the economic crisis, when questions were asked about the long-term prospects for discount sector in the German market.
Key Risks to Outlook
Rising oil prices - A more aggressive response from the ECB to rising global oil prices could significantly crimp domestic demand. Moreover, if oil prices continue to spiral higher, the demand destructive effect could spread into key export markets for German manufacturers.
Export competitiveness - A second prospect is the growing interest rate differential between the eurozone and the US leading to a stronger euro, which could eventually hurt German export competitiveness. Furthermore, Japan's devastating earthquake and tsunami could still result in a bigger disruption in global economic growth than can currently be gauged.
by S. C.
23 june 2011, World News > Europe