Meat product sales stagnate due to lower purchasing power

The decline in Romanian’s purchasing power led to a stagnation in sales of meat products this year, although producers were expecting a market increase of at least 10 percent market increase. (read more in Business Standard)

In the short run higher prices are expected for meat products, due to the financial crisis, which has led to higher lending costs, market players say.

“The consumption evolution is not spectacular this year. The entire food industry and fast moving consumer goods (FMCG) segment will be affected by the decline in revenues. It will be felt Europewide,” the CEO of the Romanian Meat Association (ARC) employers union, Mihai Visan, told Business Standard.

Pork prices rose 30 percent year-on-year worldwide, up to €1.7-€1.8 per kilogram and the local industry is depending on imports, Visan said. Price hikes were also registered for beef and poultry.

The prices of higher raw materials will “significant impact consumers”, according to Lucian Apostol, President of Kosarom group, one of the top Romanian meat processors.

“The domestic meat market will be affected by the financial crisis. Due to the depreciation of the leu, prices of imported raw materials will increase and so will the prices of meat products. Romania imports 80 percent of its pork and 35 percent of poultry needed for processing. Due to the economic crisis, living standards drop and, implicitly, individual consumer goods budgets decline,” Apostol said.

Companies in the field expect lower profits for both food producers and retailers. “If last year profit margins were between 3 and 12 percent, I think they will amount to some 2 percent this year,” the President of Romalimenta employers union, Sorin Minea, said.