BELARUS NEWS AND ANALYSIS

DATE:

14/01/2009

Research and Markets: Independent Forecasts and Competitive Intelligence on Belarus's Food and Drink Industry for Q1 2009

DUBLIN, Ireland--(BUSINESS WIRE)--Research and Markets (http://www.researchandmarkets.com/research/0eee93/belarus_food_and_d) has announced the addition of the "Belarus Food and Drink Report Q1 2009" report to their offering.

The government of Belarus has recently approached the International Monetary Fund (IMF) for a US$2.00bn loan, reflecting the country's external-debt problem, but also a more general reorientation of its economic model away from government ownership and deep integration with Russia. However, such transitions are not without their difficulties, as discussed in the Belarus Food & Drink Report Q1 2009. Following a dispute with Russia over gas prices, which led to a major hike in the price Belarus pays for gas imports, President Alexander Lukashenko has been seeking better ties with the West.

However, this has resulted in increasing tensions with Russia, which has impacted the food and drink sector. As discussed in the report, in October 2008 Russian food safety watchdog Rosselkhoznadzor announced that it was to ban imports of poultry and dairy products from 20 Belarusian companies. According to an official statement, the decision was based on the fact that Belarusian officials had not carried out second inspections on the companies that had earlier been inspected by Rosselkhoznadzor, with the Russian inspectors having detected systemic defects in the Belarusian food-product control system. However, with Russia having a history of politically motivated bans on food and drink products, many in Belarus have been left wondering if this is yet another example.

One of the positive effects of Belarus improving its ties with the West and opening its borders to greater foreign investment is that the country is increasingly attracting investments, particularly into its burgeoning beer sector. The most recent example is Finnish brewer Olvi acquiring a controlling interest in Belarusian brewer Lidskoe Pivo. Olvi bought a 51% share in the privately held company for US$16mn, and the remaining 49% will continue to be held by Lidskoe Pivo personnel. According to a statement by Olvi, the company sees good business development opportunities in Belarus within the beer, energy drinks, juices and bottled water subsectors.

Despite the loan request, the Belarusian economy appears healthy on several fronts. GDP growth remained at a blistering 10.7% over January-September 2008 according to data published in October by the National Statistical Committee, as the Ministry of Statistics and Analysis was rebranded in August. Moreover, the country's largely state-run financial sector has limited direct exposure to the broader subprime financial crisis.

Nevertheless, there are serious cracks appearing that explain the government's need for support in the form of the IMF loan. A critical factor impacting Belarus's economic situation is the rising cost of energy imports from Russia. These price increases pose a grave risk to Belarus's ongoing economic growth, which has been founded on a prolonged era of cheap energy. With Russia hiking gas prices and refusing further financial aid, the move to obtain an IMF loan and open the banking sector to woo foreign capital inflows is indicative of a desire to diversify economic support. While we expect Belarus to continue with attempts to build warmer relations with the EU and US, with a tentative but visible economic reorientation away from Russia and towards the EU now underway, this could have major positive implications for the food and drink sector, possibly opening up more industries to foreign investments.

Companies Mentioned:

* Bellakt

* Krinitsa

* PepsiCo

* Sedmoi Kontinent

For more information visit http://www.researchandmarkets.com/research/0eee93/belarus_food_and_d

Source:

http://finance.yahoo.com/news/Research-and-Markets-bw-14055058.html

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