With a view to anticipating how the IMF intervention may affect the Irish market in 2011, we recently contacted our colleagues in Aegis Media Greece.
Anna Hatzissava, CEO of Aegis Media Greece, kindly outlined how the IMF intervention has affected their market to date. There are a lots of similarities between the two markets, however our re-adjustment was before the IMF stepped in and Greece’s post IMF.
General economy
- 2009 closed with a negative GDP trend of -2.0% and the estimates for 2010 are a -4.5%.
- Despite the recession, the inflation is currently running at 5.2% mainly due to repeated VAT increases from 19% to 23% and other tax increases in alcohol, cigarettes and fuels.
- The official unemployment is currently at 11,8 with the trend to increase sharply the next few months.
Key drivers in FMCG categories
- Buyers tried to lower their expenditure, resulting in smaller basket sizes. Purchase frequency increased however, which was the growth driver for most categories throughout the year of 2009. This trend is becoming more evident during 2010.
- Private labels are growing year on year and accelerated their growth rate during 2010.
- The growing “staying in” trend, which has become the new “going out”, has led categories related to eating and cooking at home to grow in both number of buyers as well as frequency of purchase. Following this trend most major TV channels introduced cooking or similar programs.
- The “one product for all family” trend led specialized or functional products to decline as buyers are focusing on key main products for the entire household.
Retail trade
- Increased shopping frequency has led to an extended repertoire of retailers visited which reduced store loyalty. As frequency is returning to former levels the opposite effect has started.
- In 2009, Supermarkets gained back from Traditional and Discounters.
Traditional benefited from the purchase frequency increase, but this trend changed towards the end of 2009. Own labels have increased dramatically in 2010, even in dairies. - Discounters Dia and Lidl suffered share loss in 2009. Dia is to exit the Greek market in 2010. Outlets will be absorbed by Group Carrefour. Lidl announced a new expansion strategy which entails opening smaller “neighborhood” stores.
- Aldi has entered the market, but is still a small player.
Media
- In this rather gloomy economic environment, media advertising spend declined by approx.18-20% in 2009 and another drop by 18-20% is expected for 2010. That is, within two years we had a drop of 40% and a min. further decline of 10% is expected for 2011.
- Magazines and press suffered the greater reduction and OOH had a huge loss mainly due to tobacco advertising ban.
- From the categories most strongly affected are the automobiles, financial services, state advertisings and certain retailers goods like clothing.
- Media prices decreased with a corresponding increase in clients’ discounts.
- Totally different TV commercial policies expected in 2011.
- TV cumulative losses over €100 million estimated in 2010 across 5 channels.
